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CONTENTS

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Spotlight on Dr Renesial Leong, Asia’s Queen of Property

One Leaf at a Time

Top 3 trends to take notice in 2018 Are we thinking ahead of the impact of modern urbanisation?

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7 things I learnt from being a first-time entrepreneur

Financial Planning for Middle Income Group

Setting Your Financial Goals Preserving Your Estate Values for the Future Generation


EDITORIAL Editor-in-Chief Dato’ KK Chua kkchua@propertyinsight.com.my Editor Yvonne Yoong yvonneyoong@propertyinsight.com.my “The True Entrepreneur Is A Doer. Not A Dreamer” – Nolan Bushnell Asia’s Queen of Property Dr Renesial Leong certainly needs no introduction. This Entrepreneur and property magnate has fervently lived by her quote – “You Don’t Need To Be Rich To Invest, You Need To Invest To Be Rich” and built her property empire from ground zero upwards. Inspiring thousands with the success of her book entitled “Property Jewels” laden with over 200 investment strategies which is a “must read” for all property Investors, she has dissected the complex workings of the property sector into nuggets of wisdom for readers to benefit from. Having read Li Ka-Shing, Hong Kong’s wealthiest Tycoon and Chairman of CK Asset Holdings’ newspaper write-up when she was in an airplane a few thousand kilometres above sea level was all it took to inspire her into action. Without hesitation, she took up two other part-time jobs to grow her capital. And, from her first property purchase of a carefully chosen double-storey house in Setapak, Kuala Lumpur which almost doubled in value in a few years, her quest to expand her property portfolio multiplied exponentially. Today, she has expanded her portfolio steadily – acquiring residential to commercial and industrial properties and even very entrepreneurially, included in her investment portfolio – raw land. As her risk appetite and capital grew, profits from sales were re-invested to maximise the multiplier effect of investment growth, with her rental collection alone giving her a steady stream of passive income which was reflective of being in the six-figure range since the year 2000. From the success of her “Property Jewels” book, her name circulated famously in the property investment circle which was boosted by her “Never work Again Through Properties” property investment workshop series which she created way back in 1999. In true entrepreneurial style, she has not stopped there but has conducted seminars for Bankers and Investors alike. Even as this is being written, she has just concluded her overseas seminar in Hong Kong. Following the succecssful launch of “Property Jewels”, Leong wrote four more books to share her knowledge concerning specific areas of property investment including investing in commercial properties and tenant management. Her latest brainchild entitled “Property Jewels Under The Hammer” explores the property investment portfolio of auctioned properties proving that her entrepreneurial spirit spills across merely just acquiring properties. Not one to rest on her laurels, on 21 April, Leong will be conducting her annual “How to Profit from Properties in 2018” seminar where prospective investors can garner a wealth of information from her. For serious Investors, she will hold a two-day workshop entitled “Never Work Again Through Properties” on 30 June and 1 July. Having profiled so many success stories though, all that glitters is not gold. Certainly, the journey of an Entrepreneur is truly not an easy one, given the many challenges and hurdles including sourcing for relevant opportunities, riding the storms of economic uncertainty, maintaining a robust bank account and also as far as managing employees are concerned. Every day is not to be taken for granted as one has to remain competitive in securing business opportunities to sustain, manage and ensure businesses thrive for the long haul. Here’s wishing you every success on your entrepreneurial journey and a very happy, prosperous and blessed Chinese New Year! Yvonne Yoong Editor Entrepreneur Insight

Writer Felicia Soon

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On The Cover

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Property Insight Malaysia

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PropertyInsight

Dr Renesial Leong

CEO Right Lifestyle Sdn Bhd

Although every reasonable care has been taken to ensure the accuracy of the information contained in this publication, neither the publisher, editors, writers nor employees or agents can be held liable for any errors, inaccuracies and/or omissions. The contents of this publication do not constitute investment advice. It is intended only to inform and illustrate. No reader should act on any information contained in this publication without first seeking appropriate professional advice that takes into account their personal circumstances. We shall not be responsible for any loss or damage, whether directly or indirectly, incidentally or consequently arising from or in connection with the contents of this publication and shall not accept any liability in relation thereto. The views by our contributors expressed here are their personal opinions and do not necessarily reflect Property Insight’s views. The publisher does not endorse any company, organisation, person, investment strategy or technique mentioned in this publication unless expressedly stated otherwise. The publisher does not endorse any advertisements or special advertising features in this publication, nor does the publisher endorse any advertiser(s) or their products/services unless expressedly stated to the contrary. All rights reserved. No part of this publication may be reproduced in any form or by any means, including photocopying and imaging without the prior written permission of the publisher.

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COVER STORY

Spotlight on Dr Renesial Leong Asia’s Queen of Property Proving that there is no glass ceiling in the world of real estate, this Entrepreneur and property magnate is living testimony of the success of the quote she lives by - “You Don’t Need to be Rich to Invest, You Need to Invest to be Rich” as per her inspiring story as told to Entrepreneur Insight BY YVONNE YOONG

Having stamped her mark as Asia’s Queen of Property, the saying “You Don’t Need to be Rich to Invest, You Need to Invest to be Rich” fits Dr Renesial Leong to a pretty tee. With more than 20 years of experience in property investment, this property queen has indeed earned her rights to the title via recognition not through empty talks but through her real life experiences, having braved the test of time and challenges life has thrown at her. Born to Chinese parents in the mining town of Ipoh, her growing up years represent a world of difference from the jet-set, high-flying lifestyle that she’s now living. Relating how her late father’s income as a teacher was just enough to make ends meet for her family, she shares that her mother - the homemaker and the pillar of strength of the family, made many sacrifices to ensure that Leong and her siblings’ everyday needs were met. “My mum used to say that managing our household expenses was like being on standby mode at the base of an active volcano because she would never know when my very active brother would come home with injuries that would require emergency treatment that would throw her budgeting out of the window,” she recalls with a smile because she knows that those tough times are now definitely over. “Life was difficult. I wanted change and asked my mum what could change our lifestyle. She candidly replied – You have to be rich!” Leong reminisces, commenting on the Eureka moment that she needed for making that transformation in her life’s journey. As destiny would have it, she left Ipoh when she was barely an adult to chase her dreams of becoming rich. Although coming to bustling Kuala Lumpur from a small town like Ipoh is akin to being thrown into the deep sea without a float, nothing could deter the then determined young lady armed with an equally resolute iron will. Recalling her first job working as an Administration Clerk at a small local set-up - from not knowing how to operate the typewriter or drafting a proper memo, she eventually became the most trusted and respected employee in the company within a short time. Her passion to learn, initiative to do more and determination to deliver nothing but the best made her a role model for her colleagues. Soon, she was headhunted by bigger companies and was jet-setting with C-level Executives from multi-national companies. But, she wanted more.

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“The journey of giving must start from the heart” – Dr Renesial Leong

Asia’s Queen of Property sparkles when sharing her passion for property investment on stage Leong often speaks for Bankers. Seen here with Charles Sik, Chief Operating Officer of Hong Leong Bank Bhd

Earning Exponentially Beyond the Next Pay Cheque “Life eventually became better back then, and I could send more money home to my parents. But again, I wanted more. I don’t believe that I should be contented with merely drawing a fixed monthly income and spend the rest of my life worrying about when I will lose that fixed income,” attests Leong further. Her next breakthrough moment came when she was flying a few thousand kilometres above sea level. A newspaper write-up on Hong Kong’s wealthiest Tycoon and Chairman of CK Asset Holdings, Li Ka-Shing and how he made his millions through properties helped frame her next objective which was to achieve financial freedom through property investment. Inspired, she started digging out her savings book and fixed deposit certificates the moment she touched down to consolidate her monies. Sadly, it was nothing close to her dream amount. However, she remembered the Tycoon being quoted in the article stating that bank financing in a great way to multiply one’s worth. Without hesitation, she went to the bank the very next day to find out all she could about mortgage loans and home financing. She also took up two other part-time jobs to grow her capital. Soon after, armed with a better understanding of the potential financial assistance on one hand and equipped with her hardearned savings on the other, Leong made her maiden purchase.

What she didn’t realise back then was that the carefully chosen double-story house in Setapak, Kuala Lumpur, was to become the launch pad of her success today. As destiny would have it, the value of the house almost doubled in just a couple of years. Leong expanded her portfolio steadily - acquiring residential to commercial and industrial properties and even included in her investment portfolio raw land - as her capital and risk appetite grew. Profits from sales were re-invested to maximise the multiplier effect of investment growth. Her rental collection also gave her a steady stream of passive income which was in the six-figure range since the year 2000. “Profits from the sales of my properties were the sweetest thing I had tasted for a long time but beneath that sugar coating, is the priceless lesson I learned from the sharing of Tycoon Li and my mother’s golden words – “You have to be rich!”, she testifies. The idea was further cemented by what Portrait Photographer David Bailey once stated:-“To get rich, you have to be making money while you’re asleep” which was exactly what she had wanted to achieve.

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Giving From The Heart “Being rich is not just about what you have in the bank account - but it’s also about what you have in your heart,” shares Leong. Leong may have built her fortune through properties but nothing makes her happier than having the privilege to help the less fortunate and giving back to society. From the very beginning, she has practiced setting aside a part of her profits from property investment to be donated to the less fortunate. However, she acknowledges that the power of one individual cannot be compared to the combined efforts of many.

With these thoughts in mind, Leong became even more motivated to share her knowledge in property investment and encourages all of her graduates to share her all-encompassing vision. “The journey of giving must start from the heart,” affirms Leong. To embark on this journey of giving, Leong has committed herself to sharing her knowledge in property investment with budding Investors. Recalling her property investment journey, Leong says she will never forget the challenges and uncertainties she had to face when making her first property investment. Back then when she first started out, she did not have any guidance on where, what and how to invest in property and she definitely did not wish to make the wrong bet with her limited, hard-earned capital. “Information was not forthcoming in those days. There was no Internet nor Google. I combed through every bookstore there was in KL and couldn’t find any guidebooks on property investment. I had a few sleepless nights and was jittery when I penned my signature on my very first Sales & Purchase Agreement (SPA). I vowed to make a change and make it easier for budding property investors to take their first steps and ultimately be able to give back to the society,” she recollects.

Spending quality time with the needy. Together, Leong believes that we can touch more lives and make the world a better place for all

The launch of Property Jewels -

THE FIRST PROPERTY INVESTMENT GUIDEBOOK WRITTEN IN AN ASIAN CONTEXT By A Malaysian Author

In keeping with her high aspirations, Asia’s Queen of Property launched “Property Jewels” in 2004 - the first property investment guidebook written in an Asian context by a Malaysian Author. It comes with over 200 investment strategies - a “must read” for all property investors. This game-changing book topped the best-selling charts in leading bookstores for the longest time. It was only four years later before another Author wrote a book on this subject matter. However, Leong still holds the record for the highest sales in monetary terms for a single book written by a Malaysian Author. Following the successful launch of Property Jewels, Leong wrote four more books which are also available in Bahasa Malaysia and Mandarin to share her tips and opinions on specific areas of property investment including investing in commercial properties and tenant management. Her latest brainchild is entitled Property Jewels Under The Hammer, which is a must read for those planning to expand their property investment portfolio through auctioned properties. Testimony to the faith her readers have on her books were further attested by local and foreign banks who bought exclusive

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hardcover copies for their elite customers as gifts, to support them in becoming even more savvy investors. Her book and name became much talked about in the property investment circle which was further boosted by Leong’s “Never Work Again Through Properties” workshop - a property investment workshop series designed and coined by her way back in 1999, where this industry veteran shares on the latest developments, valuable tips and offers advice to those who wish to learn from her. For every workshop she undertakes, Leong will spend at least six months researching on the latest topics, devote weeks and many sleepless nights to prepare and fine-tune the materials before finally presenting her thoughts to the privileged few. Participants will also get to learn from actual property investment case studies, simulation of real-life situations and how to make the best of what they have learned to quicken as well as maximise the results. “Preparing for the workshops is really no joke. I cannot just pluck figures from the sky or impart half-baked information to the attendees. Every word that I speak is based on facts backed

by intensive research and my personal experience as well as those of my past graduates. They are definitely no small talk”, assures Leong. Despite the hard work, Leong shares that the biggest bonus from these workshops is the impact they have made on people’s lives. She has met many of her past graduates at least expected places like airport lounges who have thanked her profusely for offering life-changing advice to them and how property investment has made positive changes to their lifestyle and how giving back some of the profits to society has led to a more meaningful and fulfilling life. Moving forward, Asia’s Queen of Property’s two-day “Never Work Again Through Properties” workshop will only be held once a year with the next workshop scheduled to be held on 30 June and 1 July 2018. To tie the tide over, prospective investors can also join her “How to Profit From Properties in 2018” seminar on 21 April 2018. This one-day seminar promises a compact session of information sharing, tips and guidelines on how to make the best out of the current property landscape including the “dos, don’ts and maybes” for the next 12 months and much more.

Leong with her seminar participants

Addressing Real Estate Matters Tenant management is one area which Leong will share her expertise willingly in as reflected in her “How to Profit from Properties in 2018” seminar. “ Finding the right tenant is no easy task she says but maintaining the tenant is an even bigger challenge, Leong stresses adding that in the property investment game, tenants are the most important stakeholders hence, tenant management is a very crucial skill set to acquire. When renting residential properties to students, she advises that owners have clearly defined house rules which should

be visibly displayed in the unit before the commencement of the tenancy. Simple rules like not wearing slippers in the apartment, no illegal activities, keeping to the personal space and proper management of shared facilities like fridge, washing machine, living hall, etc. might be trivia to some but will cause unnecessary conflict when not observed correctly. “For expatriates, one must ensure sufficient deposit is collected before commencement of tenancy. A longer tenure should call for higher deposits as it means longer period of wear and tear, and there’s a bigger risk in not being able to find the same replacement units, resulting in higher refurnishing cost. Feb 2018 |

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“Maintenance of fixtures and fittings like lights and airconditioners should be well-defined as the responsibility of the tenant once they move in. “You don’t want to receive calls at 10pm asking you to change their light bulbs for them, right?”, she says in jest. Leong continues to share her recent experience of a pleasant hand-over. One of her luxury apartments in the Kuala Lumpur City Center was tenanted to an expatriate about five years ago which reaped more than half a million in rental income for her. When the tenant repatriated back to his home country and handed back the property to her, the inspection showed a number of damaged items that needed repairs and replacements. Thanks to a well-drafted tenancy agreement and an ethical tenant, he honoured the damages and agreed to pay for the repairs and replacements which summed up to more than five figures! “The tenant light-heartedly quipped that he’s sure he will never see light of his deposits again but he understood his responsibilities for all the damages incurred. We parted with a smile and promised to meet up for coffee when he’s in KL again,” relates Leong. While there are no proper regulations and guidelines on renting residential properties for short-term commercial purposes (like Airbnb) for now, Leong advises owners with such plans in mind, especially for high-rise units managed by management bodies to check with their respective management companies for by-laws imposed. “Renting out your apartment on a short-term basis has proven to yield a higher income as compared to long term rental. A

three-room apartment in a reasonably strategic location will probably fetch RM1,500 per month. However, the same unit can easily be rented out at RM300 per night which is about RM100 per room per night and cheaper than most budget hotels. Multiplied by eight weekend days per month, this will give you RM2,400. Stretching this a little in the case of renting out for another two nights for instance, will easily give one a return of RM3,000 per month, which is a whopping 100% more!” Leong explains. “Short-term rental is also very easy to manage with the advancement of technology. It is almost ‘contact-less’ and you can manage it even when you are out of town,” she adds sharing how she managed to check-in and check-out from an apartment unit in Japan without meeting the owner. The owner had placed the apartment key in a password-protected lock outside the unit and emailed her clear instructions together with the password. All she had to do was to unlock the door using the password provided. Having spent a few days in her home away from home, she placed the key back into the lock upon check-out, sent a photo of the lock back to the owner. In the end, she saved enough on accommodation for another big meal in Japan, with more tips on this subject to share in her next workshop. “I have a number of my graduates who have capitalised on this short-term rental model”, says Leong. Armed with a small capital, these Entrepreneurs have invested in strategic units around town and rented them out at a rate that is sufficient to cover their monthly mortgages. Over the years, they have not only enjoyed a steady stream of passive income as most of them hold full-time jobs but also benefitted from capital appreciation on the property they have held. Industrial properties such as factory lots on another hand, require much more attention. While the tenancy period is usually longer, there are many more regulations and guidelines to adhere to. Tenants may want to make changes to the façade of the building, remove walls, rewire electrical points, etc. and all these will add to the restoration cost upon expiry of the tenancy. “You must ensure that the tenant has obtained all the necessary

Clockwise from far left: Fun time at the studio Part of Leong’s dynamic team After an awesome session Posing with happy participants

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approvals from local councils, governing commercial and/ or industrial bodies, etc, together with your written approval before they commence renovation work as you certainly do not want to get involved in any legal tussle with the authorities for the mis-doing of your tenants,” she advises. These are just a small fraction of what will be shared at the oneday seminar and two-day workshop organised by Asia’s Queen of Property. Other areas of discussion include “How To Grow and Preserve Your Wealth Through Property Investment”, “The Importance and Necessity of Investing Right”, “How To Re-position Your Property Investment Game”, “Achieving A Sustainable Retirement”, etc. “It is crucial to learn the right skills in order to breakthrough and fast track your property investment game without wasting valuable time,” emphasises Leong. As a matter of fact, more than 70% of her graduates took action to expand and align their property investments, with at least 30% of them buying their very first property within six months after attending her 2-day “Never Work Again Through Properties” workshops. Reinforcing her personal statement and belief, “One Need Not To Be Rich To Invest But You Need To Invest To Be Rich,” Leong attests that any Financial Planner will definitely attribute property investments as one of the main key categories in their portfolio proposal. “It’s just a different percentage put into the basket, depending on their client’s risk appetite. Hence, knowledge in property investment is really crucial. One wrong property will set you back a couple of years to undo - wasting valuable time, deplete your capital and borrowing capacity with lending institutions, as well as result in emotional heartaches and physical headaches. “Participants to my seminar will also be glad to know that while they are learning on how to preserve and grow their wealth through properties, they are also playing a big role in giving back to society,” she adds. Leong has always allocated a part of the seminar fees collected to be donated to charities of her choice including World Vision, UNICEF, etc. Besides walking the talk, she also encourages all her graduates to give at least 5% – 10% of the profits they make from property back to charities of their choice.

A Lunch Date With Asia’s Queen of Property Investors and others who are seeking solutions or are stuck with what, where and how to invest their hard-earned capital in the property market can arrange for a lunch date with Asia’s Queen of Property Dr Renesial Leong that will impact their lives. Leong has set aside some time at her 1-Day “How To Profit From Properties in 2018” talk, to have lunch with 10 attendees, listen to their current challenges and how she can provide much-needed guidance to set them in the right direction. If you are one of the many who are at a crossroad now or have burning questions to ask, find out how you can be one of the privileged few to get the Asia’s Queen of Property’s personal attention. Find out more at www.asiasqueenofproperty.com. In summary, if a hometown girl can make it big with properties, so can anyone if they just believe in themselves. A journey of a thousand miles begin with the first step in the right direction! For more information on the one-day seminar and two-day workshop, log on to www.asiasqueenofproperty.com or Facebook: https://www.facebook.com/asiasqueenofproperty/ or follow Dr Renesial on Instagram #asiasqueenofproperty

Bringing more joy and offering better living conditions to the less fortunate has always been Leong’s vision. With the financial stability and freedom that she is enjoying now, she is able to travel for at least six months in a year to different parts of the world for charity work while learning about growing property trends, social-economic changes and environmental developments. Leong’s wish is for more to join her in this journey so that together, they can make this world a better place. Feb 2018 |

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ENTERPRISE OF THE MONTH

One Leaf At A Time

Life can be unpredictable. But one thing we can predict: it has many unexpected twists and turns. It is beautiful as it presents a myriad of experiences that make up a person’s journey. EI had the opportunity to have a chat with the Managing Director of Nyonya Leaf, Andy Yip, on his story of risks and chances and pure passion.

Born and raised in Perak, Yip has always been a foodie. Growing up in Ipoh particularly, he was surrounded by hawker stalls that served affordable and quality food. Naturally, he loves food and one would have expected him to start a food and beverage business as soon as he leaves school. However, that was not the case. “I became an accountant and I began work with Hume Industries Berhad for a good nine years and then with the Coca-Cola Company in China for another eight. I was earning really well and I had the chance to work in many provinces in China but there was something that I felt I had always wanted to do. I wanted to be an entrepreneur and I wanted to start my own business,” said Yip.

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ENTERPRISE OF THE MONTH

Inspired by his wife’s family background in Nyonya cuisine, Yip decided to open a restaurant that focuses on authentic and delicious Nyonya food. “My wife’s grandmother and mother were from Penang and they sold handmade kuih for many years. One of the chores my wife would do is help them press the glutinous rice into the baskets and make sure the rice is packed into nooks and crannies. Albeit it was a tedious chore, that experience was a memorable one for her,” added Yip. “I wanted to bring that kind of an experience, of enjoying great Nyonya food, the culture, the atmosphere, into our Malaysian society. And if you noticed, we use many types of leaves in our recipes such as pandan leaves, banana leaves, mint, and laksa leaves. That is where we had the idea of using Leaf in the company’s name. We simply named it Nyonya Leaf and we loved it,” said Yip. After much deliberation and support from his brother, Yip and his wife opened their first restaurant in Johor Bahru back in November 2013.

Winds of Change and Challenges The first impression that Yip gave during our first interview was how a person can so hospitable and so trusting. Despite the success he has achieved, he remains humble and to a certain extent, fatherly. Yip was never shy when sharing about the ups and downs of the business. One of the most unforgettable moments during the opening of their first restaurant, Yip had trouble with staffing. “We couldn’t recruit nor retain staff at the restaurant because most people who come in, they expect work to be in a certain way. They’d never be interested to be servers. It was a really difficult time. At one point I was the driver, assistant cook, cashier, and I had to get the ingredients from the market as well. That lasted for a few weeks and I was just spent!” Furthermore, both Yip and his wife had no F&B experience. “But my wife and I persevered and we just made things work anyway. I may not be an expert in cooking, but I understand the core of the business very well. And that’s all that matters,” he added. Yip was confident in the business because he knew the processes and he had his previous career to thank. He explained how the many years of working with large corporations have taught him how to run a business i.e. setting structures and paying attention to detail. Currently with their eighth store opened, six being in JB, and a new one opening soon in Sunway Pyramid, it seems like there is no stopping Yip. However, as faced by many an entrepreneur, gaining capital and rate of expansion can be overwhelming. “Banks were reluctant to approve loans initially because they had no faith in the business. But after seeing how much we had grown, now we are spoilt for choice. And when one challenge is over, another one comes knocking,” said Yip.

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“We opened our second store after one and a half years of the first store. Within five years, we have more than double that. This is when self-control is key and proper planning is vital. With loans now being approved so much easier now, and mall operators persuading us to operate our businesses in their malls, you can really be swayed to just open up wherever and whenever you want to. But that is not the case. I crunched numbers for a living, I still do. I am as hands-on as anyone could ever get. And I always believe that you need to study trends and the overall market before making any big decisions. You need to be ready first.” He added that any expansion idea will also have other problems following suit such as production of food, logistics, and employees. Even though it may seem like a good idea initially to open a few stores at a time, Yip believes that it is best to have the business stabilise first before growing any further.

What’s the recipe for starting a business? Starting and running a business is definitely not a walk in the park as Yip had described. But he was generous with pointers aimed at anyone who wants to venture into the F&B industry. “Age is nothing but a number. Look at me! I’ve only started this business a few years ago and I’m approaching 50. It doesn’t matter when you start; it’s whether you will do or not. I’ve been discouraged too because it was deemed too late to begin my own business. All I knew was I wanted to share the uniqueness of Nyonya cuisine to people and I couldn’t be working forever in China.” To budding entrepreneurs, Yip advised that it is best to gain as much exposure of the industry they want to be in first. “And once they have, get a great partner; someone who will also put in the same effort, time, passion and dedication as you to grow the business together. Finally, ask yourself this question: Am I ready for this commitment? If your answer is a strong yes, just do it and don’t look back,” he added. With a few more stores set to open this year, and potentially one in Singapore, Nyonya Leaf seems to be growing more day by day. It’s no wonder; with someone who is innovative, methodical, and most importantly, someone who loves what he is doing, Yip is definitely looking forward to a great year.

“...it is best to have the business stabilise first before growing any further.”

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FEATURE

Top 3 Trends to take notice in 2018 To say 2017 has been an interesting year is an understatement. With Donald Trump being sworn in as the 45th president of the United States of America (US), North Korea conducting its sixth nuclear test back in September, and the announcement by the US Oceanic and Atmospheric Administration that 2017 was shaping up as the second warmest year on record, it just begs the question: What is the warmest year? 2016. Yeap. You read that right. But now that 2018 is here, let’s take this opportunity to *ahem* sweep things under the rug for a short moment and focus on what greater possibilities are out there for businesses. Hey, we all have to eat right? So here’s looking at the top three trends that could make or break a business, probably.

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” —Don & Alex Tapscott, authors of Blockchain Revolution (2016)

1. BLOCKCHAIN According to Investopedia, a blockchain is a digitised, decentralised, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically. Originally developed as the accounting method for the virtual currency Bitcoin, blockchains – which use what is known as distributed ledger technology (DLT) – are appearing in a variety of commercial applications today. Currently, the technology is primarily used to verify transactions, within digital currencies though it is possible to digitise, code and insert practically any document into the blockchain. Doing so creates an indelible record that cannot be changed; furthermore, the record’s authenticity can be verified by the entire community using the blockchain instead of a single centralised authority. If effectively implemented at scale, this technology can enable an entirely new class of consumers who have never had access to modern financial services. For example, digital assets can provide banking, lending and investing to the two billion adults, internationally, who lack fundamental financial resources. Blockchain has already made a big impact on the banking industry, and this year, it will make its way into new industries. Everything from procurement to legal management will be looking to blockchain to increase security throughout the entire customer experience.

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2. SOCIAL MEDIA

3. ARTIFICIAL INTELLIGENCE (AI)

Jeffrey Hayzlett, a prime time television and radio show host, shared that social media is hardly a new concept. It’s been around for more than a decade but how we use it to reach our customers has changed. According to Statista, the number of worldwide social media users is expected, by 2020, to reach 2.95 billion, or about a third of the Earth’s population.

Hayzlett added that we’ve been hearing about AI technology for a while now. Though not new, AI’s impact will be felt more and more in the way we do business. According to a PwC study, 72 per cent of business leaders surveyed deemed AI a ‘business advantage.’ The same study revealed that executives were looking to AI to help with repetitive, menial tasks such as paperwork (82 per cent), scheduling (79 per cent) and time sheets (78 per cent).

As reported in the South China Morning Post, social media, which is often associated with millennial consumers, has been an important source for luxury brands – not only for understanding the spending pattern of consumers in their 20s but also for communicating with the group. Pierre Rainero, Cartier’s director of image, style and heritage, says that the brand is interested in knowing more about their younger clients. “We are in a period when people have different ways of approaching the maison, from getting to know our products, browsing the shops, or the way they shop,” he says, adding that Cartier is taking this into account with regards to its digital presence.

While companies like Google, Spotify, Microsoft, IBM and other tech giants are all in on the AI game, of course, some observers worry that that technology will make business processes less personalised. The reality, however, is that AI is capable of enriching human interaction by taking away mundane tasks and helping enhance customer content delivery, to a highlypersonalised level. Taking away those mundane tasks opens the door for the more creative, personalised items customers are demanding.

In a bid to reinvigorate sales in the massive Chinese market, British luxury fashion brand Burberry has, this year, ramped up advertising on China’s popular social media app WeChat. It’s a strategy that’s paid off handsomely for Burberry, which saw a four per cent rise in overall sales in the second quarter. That’s more than expected, thanks largely to a resurgence in China, where sales had slowed in recent years.

Andrew McDermott, a writer from Workzone, opined that artificial intelligence has been democratised. Microsoft announced that AI is already present in the half a billion devices running Windows 10. Google has released TensorFlow. Berkeley AI research released Caffe and Apache released Apache MXNEt. Amazon created an AI friendly platform for developers to work with a variety of AI specific frameworks and services.

WeChat users even have a cash transfer service at their disposal. The service, linked to your bank account, can settle the bill at restaurants and stores, and transfer funds between contacts. No wonder online shopping channels are rushing to the app.

So what does this tell us about artificial intelligence? It’s quickly becoming a mainstream obsession. Here’s what’s interesting about these changes. These large companies aren’t simply creating a few one-off products with AI. They’re quietly integrating it into every part of their organisation, with both internal and external applications. As it turns out, this is good news, for now. AI is still in its infancy so job loss for most people is negligible. And it’s likely to stay that way for at least the next decade.

Feb 2018 |

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GUEST CONTRIBUTOR

Are We Thinking Ahead Of The Impact Of Modern Urbanisation? Moving with the times in architectural designs BY TAMARA JAYNE

It seems like only a few moments are spent ogling at architectural designs around the world, from centuries-old cathedrals to modern skyscrapers, structures like these can often be likened to an iceberg. We usually see the outcome and structural beauty (the tip of the iceberg) but little recognition goes into the tireless hours, workmanship and decades spent planning, designing and building it (the full iceberg beneath the water). Digital technologies have made it less of a necessity to live in major cities, however urbanisation is still very much rapidly growing throughout the decades. Contributing factors that go into making urbanisation work in different parts of the world include: space, sustainability, preservation of culture, and progression with the times. At the recent Fenestration BAU China 2017 in Shanghai, Messe München (one of the largest exhibition companies in the world) along with their China partners had design experts and renowned architects flown in from around the globe to share their industry insights. The exhibition fair, said to be Asia’s largest professional gathering in the building industry, attracted 625 exhibitors – of which 20% were international – and over 95,000 visits including many international and national architects. Dr Reinhard Pfeiffer, deputy chief executive officer of Messe München said in his opening speech that “the aim of the conference is to give insights into quality, sustainability, and urbanisation for the Chinese market.”

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GUEST CONTRIBUTOR

Sustainability should be the core of our innovations and not just an add-on.

Are we thinking about leaving a positive impact? Hasty urbanisation has led to pollution, land destruction and other damages on our environment. With increased awareness of this, it has led to thinking of new solutions to create more green, sustainable and smart cities. As Dr-Ing Peter Mösle, partner of Drees and Sommer, said at the congress, “Sustainability should be the core of our innovations and not just an add-on.”

What is a smart building?

Setting design priorities right

Mösle shared that often people improve their buildings over time and try to make them work towards leaving a positive impact on the environment.

In terms of design, we see much of nature incorporated into office spaces and buildings today.

However, his team’s strategies are different. They reverse it by first making sure that the building leaves a positive impact on the environment.

“It can’t only be design-oriented and not human-oriented. It’s better to focus on sustainability and key efficiency first, and then design,” said Matthias Strauss, Messe München’s exhibition director.

“Buildings should be like trees. Trees give you clean air, clean water, bring enough daylight – this is what our buildings should imitate. They should be creating more energy than the building needs in order to leave a positive impact.”

“Nature can sometimes be even more playful than people. In one of our building projects, we found a tree growing in between two walls. We decided to leave it there as a feature,” said Professor Brian Chang, head of TeamMinus, Beijing.

An example given is the Barcelona Football Club Stadium (Espai Barca) that placed sustainability and the environment as their core objectives. Their efforts included using recyclable materials, urban integration, smart parking, solar photovoltaic systems for renewable energy (lighting), and rainwater harvesting to save energy and the environment.

Instead of simply transforming old cities into new buildings, we have to start transforming from ‘old city’ reconstruction into urban organic renewal, such as making buildings more friendly to reduce the use of electricity.

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Changing culture and shifting mindsets

How can buildings inspire us?

It is never an easy feat to change deep-rooted culture that is so used to their conventional ways of design for the better.

How an environment affects a person explains why designing buildings plays a major role in how a person functions and feels.

What BAU aims to do is align with China’s governmental targets in their five-year plan to move into creating sustainability and efficient homes, and building new cities in surrounding mega cities.

Humans are innately playful creatures and we can translate that in the way we design our workplaces and amenities.

“We try to break that down for the building market by holding exhibition fairs such as this one. Our main target groups are architects, developers, real estate groups, dealers in the high quality ranks, and engineers. We want to give exhibitors their right target groups for their businesses,” said Strauss. For countries like Singapore, it is a challenge for them to get energy. They need to either import it or use gas because of the lack of wind and limited solar energy, shared Professor Kees Christiaanse, partner of KCAP Architects and Planners, Rotterdam, Zurich and Shanghai. In sci-fi movies like the Blade Runner 2049, there is an ‘expectation’ that we will eventually drive flying cars and work in extreme futuristic structures. On the contrary, Christiaanse predicts that the future of a city will be less sci-fi and more of a co-existence of the old and the new, rather than a complete elimination of the old.

Prof Chang, for example, implemented teamwork games into one of his projects and it includes rock climbing and street games which allow physical interaction for the public in a highly digitalised world. Kai-Uwe Bergmann, partner of Bjarke Ingels Group (BIG) New York shared about how they incorporated people’s cultures into their parks in Copenhagen. The neighbourhood consisted of citizens from many parts of the world. After doing a survey to ask what they missed about their homeland, the designers decided to embed some of their cultures into the parks. Trees, bus stands, a fountain from Morocco, board games and neon signs were re-created to represent their feeling of being ‘home’. Building and environments can inspire. They can send a message that you care about your people and their well-being.

How will Malaysia be affected? Corporations in Malaysia can look forward to working together with Messe München as they hope to establish connections with Malaysian corporations. “Malaysia will be one of our focus countries, together with Vietnam, Thailand, and Indonesia in the coming years,” added Strauss. Are you ready for a change?

Note: This is a guest post by Tamara Jayne. She is an assistant editor and writer with Leaderonomics.

Feb 2018 |

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GUEST CONTRIBUTOR

7 Things I Learnt From Being A First-Time Entrepreneur

A certain stingy person’s honest account on entrepreneurs and entrepreneurship I was 21 years old when I had my first taste of “entrepreneurship.”

There was a university sports carnival coming up (shoutout to all my homies from UTP yo!). And knowing how our university climate was hot as hell, we predicted that the thirsty athletes would need drinks. Ice-cold ones. Our business plan was simple. We’d buy a big tub, lots of ice, a couple of 24-can cartons—then set up shop at the sports complex. And… our hypothesis was right. We fed the thirsty athletes and sold out in a few hours. I can still remember the moment when we finished selling everything. There we were, a bunch of proud, successful entrepreneurs. The grand profit to be split among five of us? RM13.40.

A Failed Entrepreneur? Now obviously my business sense wasn’t very good when I was younger.

In mid-December—4 weeks after I started selling—the products sold out.

Nowadays I read about all these wonder kids selling things when they’re 10 years old, and I get jealous. I feel bad: “WTF was I doing when I was 10 years old?! I was 21 years old before I started selling anything, and our profit couldn’t even buy us two Happy Meals!”

I remember the same feeling of triumph from 12 years ago. Like the wind-in-your-hair, top-of-the-mountain scene from a 90s Beyond-Peter Stuyvesant video.

You know how society idolises top entrepreneurs like Elon Musk and Tony Fernandes? Yeah, I’m on that bandwagon too—I really admire those guys and wish I could be just like them. But I’ve never felt that I’m good at entrepreneurship. Between our “lucrative” Sports Carnival Drinks business and now, I can’t remember the last time I sold a physical product. (Yeah, sometimes I get paid for writing, but that feels very different.) I haven’t even sold anything secondhand before. I’m more comfortable giving stuff away.

Entrepreneurship 2.0 But something changed recently. Believe it or not, I started planning a side hustle—which I predicted could make some good money. I placed an initial order of 200 units, and imported them into the country in mid-November.

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The difference is, this time I made a sizeable (~RM 18.5K) profit to be split between me and my partner. And I now have a public blog where I can share what I’ve learnt. Why I am telling you all this? Definitely not because I’m a great entrepreneur. This isn’t going to contain some groundbreaking Harvard Business Review theories. In fact, it’ll all be common sense stuff—told from a noob (me) perspective. But maybe somewhere out there, there’s a 34-year-old housewife who needs extra money for her baby. She wants to start selling things but she’s scared. And reading Tony Fernandes’ biography makes entrepreneurship sound so big and hard. Maybe what she needs right now is to hear from someone who’s just a small step ahead of her. Well, I’ll try to help. Here are seven lessons I’ve learnt from being a scared first-time entrepreneur.


Market Research Level 2 Here’s some further market research I did: • Asked a friend (who’s a huge influencer in this market) for advice on selling these items. • Spoke to several friends whom I thought would be interested to buy. • Looked at Facebook posts of a previous seller. I tracked the time between his initial “announcement” post, and any final posts showing he had already sold out. • Looked deeper into stock availability at a couple of resellers— both local and foreign. I also contacted the manufacturer directly. • Did some Google keyword research to find out how many Malaysians were searching for it.

1. Do Your Market Research What’s the Number One reason we could sell everything within four weeks? I put it down to right product at the right time. Before I got the idea to start selling, I was actually looking for the product myself. So I did some research. And if you know the kiasu (always trying to get the best deal) me, you know that when I’m researching something—I usually go deeper than the average person. So I did a couple of things, including: • Stalking Facebook/Telegram groups for sellers. • Going through a variety of websites (both local and international). • Looking directly at the manufacturer’s website. Halfway through, I started to realise: • S***, it’s hard to get these things in Malaysia. •  There were hardly any Malaysian websites (or “Facebook stores”) selling them. If I remember correctly—when I started, there was just one Malaysian website. • There were hardly any listings on online shopping websites like Lazada or Shopee. Even if there were, they were out of stock or very expensive. • How did I know they were expensive? I compared the price to the manufacturer’s recommended price, Amazon and another Singaporean website. Big (like RM100+) difference. (Note: All of the above are freely-available information that anyone with an Internet connection and a curious mind could quickly find out.) Again, I’m not a great entrepreneur, but even to me—this smelt like an opportunity to make money. So I probed further.

And here’s what I found out: • The products were being sold out worldwide. It wasn’t easy to get stock anywhere. Even if I purchased a bulk order immediately, it would take one month for the manufacturer to deliver—not including shipping time. • All the friends I spoke to were very positive about buying from me. I guess it helped that I was offering to sell them below Malaysian market price. • Anywhere between 100–1,000 Malaysians did a Google Search for the product every month. (In retrospect—this figure was awfully low.) •  Finally, based on his Facebook posts—I concluded the previous seller sold out his stock (200 units) within a couple of weeks. In summary: huge demand; limited supply—especially if you want your item quickly; and competitor pricing that I was sure I could beat. I thought to myself, “This could really work!” Note: What I was doing was a primitive form of what Startup People call “Market Validation.” And yes, I know it’s not as easy as just searching for stuff online. It helps if you have some influence, and if you know people. Then again, I see no reason why someone who’s very motivated couldn’t do it too.

2. Believe In Your Product What product was I selling, you might ask? It’s something that most Bitcoin/crypto-enthusiasts will get at some point: a cryptocurrency hardware wallet. Like I mentioned earlier, before I had any thoughts about making money, I was actually looking for one for my own use. But me being me, I didn’t want just any hardware wallet. There are some really expensive ones, but I wanted one that was both cost-effective and high quality. So I had already been studying the different models for a while—before I decided on which one I wanted.

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GUEST CONTRIBUTOR

The exact model isn’t important to this article; I’m not even going to mention it here. But what I want to emphasise is this: I fully believed in the product I was selling. And if you’re a first-time entrepreneur, I think you need to believe in your product too. Why? Because you can explain to people why out of all the products in the world, you chose yours—and why they should choose it too. Because your personal knowledge about the product will help you answer (and convince) any queries/doubts that your customers have. And because it makes you an honest businessperson. Yeah, you’re doing it for money and making a profit. But they’re also getting a really good product. Win.

3. Have Strong Partners; Define Their Roles I had two extremely-important partners in this project, without which—it would never have happened. One was an investor and one was a logistics partner. My investor partner provided me with 50% of the initial capital. I needed it because even after all the positive market research—I was still cautious. I didn’t want to dump all my savings into my first real venture. But since there were two of us—we could share the risk. We agreed to split the profits equally, even though I was going to have to do a lot more work (coordinating supply chain, logistics and marketing) than him. But I offered equal profits, on the condition that I got final say in business decisions. This isn’t because I’m power crazy. It’s just that when running a project, I like to have a simple decision-making process, with an ultimate decision maker. Then your “startup” can make quick, effective decisions.

p.s.

If you’re setting up Google Ad Words for the first time, you get RM150 of ads (free), when you spend your first RM50.

4. Play According To Your Strengths & Weaknesses My logistics partner was equally, if not more important. Why? Because I didn’t want to deal with packaging, logistics and customer queries. I know that sounds snobbish, but as anyone doing sales would know—customer service is a lot of work. Both my investor partner and I understood from Day One that we did not want to get involved in distribution. We had no time and it doesn’t play to our strengths. His strength is having excess money to invest (like Bruce Wayne). And having enough faith to let me run the show. On the other hand, my logistics partner has already been running a highly-successful online store for a couple of years. So I knew she would handle the back-end logistics well. Plus of course, I paid her a commission for every item that she delivered. Win-win. My strength? I think it’s bringing different people with different strengths together for a good cause, plus having some crypto + finance knowledge. That, and being a shameless voice on the Internet of course. You’re never going to be good (or rich) enough to do everything well. So find partners who will be able to complement you.

5. Launch With Faith, Then Learn As You Go The first week after we launched, sales were actually pretty slow. I think we sold four items. That got me worried. So I started to think about how I could boost sales. I reached out to my partner for advice. I re-looked at how other people had been doing it on Facebook, and continued to stalk competitors. Along the way, I even had to learn how to use Google AdWords and spent a couple of hundred bucks on Google ads. In the end, people eventually found our products and sales started coming in. Towards the end, they were coming in so rapidly, that my partner even had to source for additional stock to fulfil all the orders. I learnt a couple of cool, but surprising things. Like: •  Malaysians love to Private Message on Facebook—even though your ad clearly says you’re very slow at replying PMs.

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• People still love to ask for Cash on Delivery—even though we offered free shipping. I suspect this is because the products are tech-related and not cheap (~RM380). • Lazada was my major source of sales. It’s pretty cool how Lazada-listed products show up on Google searches directly— without you having to pay anything extra. • I had severely underestimated demand. The world is crazy about cryptocurrencies right now. And it’s about to get crazier. Startup people would say that I had a successful “pilot programme.” And that I would need to “iterate” and “scale” based on my initial findings. I like to put it in simple language: Most of the learning comes after you’ve launched. Don’t let your “business” live in the fantasy-land known as your head for long. Instead, see what happens in the real world and learn from it.

6. Everything Changes When we first launched, I knew we were the cheapest resellers in Malaysia. I honestly believed the other guys were selling it for way too much. I wanted to make this accessible to more Malaysians, so I tried to set a price that was still a good profit—but a little closer to what Europeans or Singaporeans would pay for. But a few weeks in, our competitors started to adapt. I saw them dropping their prices to beat ours (good for the consumer, yay!), so we dropped our price too. (Now that we’ve sold out, they’ve raised the prices back up though.)

So my future boss asked me to exit the business by midJanuary. With my stock arriving in mid-November (plus all the other changes), I knew I had only about eight weeks to sell everything. Thankfully, we managed to pull it off in about four. But it was a scramble. My point is, we live in an unstable world that constantly changes. You’re never going to be able to prepare for everything. Don’t be overly attached to your plans, ideas or decisions. Plan your best; plan for contingencies; and then execute. But be prepared to adapt. And then s*** will still happen. But if you’re already expecting it to—maybe you can make something good out of it.

7. It’s Never Too Late / Early To Start The day we sold the last of our stocks, I was talking to my partner. Here we were, 33 years old—having our “first” taste of entrepreneurship. We both laughed at how “late” we were. We had been talking about starting a side business for at least eight years already. But never launched because we were so kiasi (Hokkien slang for “overly timid”). Looking through rose-tinted glasses now though, I think this was actually the right time for us to start. For our personalities. But it could be different for someone else. When you’re young, you may have no money—but you have lots of energy, no ego/reputation to protect, and the unburdened optimism of youth.

Next, I discovered that the manufacturer was starting to ship items directly to consumers, and stopping bulk orders. (A bulk order is when a reseller buys a big quantity from the manufacturer in exchange for a nice discount.) I felt this was quite unfair to resellers who had already invested in stock; because now not only do you have to compete with other resellers—you have to compete with the manufacturer too.

When you’re older, you may be more scared of failure—but you’re wiser, financially more stable, and have influential friends. Wherever you are in life, you have advantages. Use them.

But they’re the manufacturer. I guess they can do whatever they want.

Happy to say that we all figured out how to make money; whether by doing well at our day jobs, buying properties and renting them out, or investing in the stock market. As for me, I finally learnt how to sell products online too; at the grand young age of 33 years old.

The Final Twist There’s a final twist to the story. In between the time I first placed the order and our product launch—I decided to accept an offer to work for a crypto-related startup. This is a full-time position starting mid-January 2018. It was an opportunity of a lifetime for me and I grabbed it. But I also discovered selling hardware wallets is a potential conflict of interest.

12 years on, I look at where my “drink entrepreneur” uni friends are today. All of us graduated with engineering degrees at 23 and started working.

And if someone like me—who’s spent most of his life not daring to be an entrepreneur can learn to—then maybe you can too.

A print exclusive article, this i​ s a guest post by Aaron Tang. He is the founder of mr-stingy.com. He writes about optimising time, money and relationships, to make the most out of life. Follow him on Facebook, Google+ or Twitter: @mrstingy2014.

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FINANCE STRATEGY

Financial Planning for Middle Income Group Financial planning has often times been regarded as something only reserved for the rich and only the rich people can afford to do, is this a fair observation? Is it true that if you are not rich, you should drop the idea of financial planning? What if you are in between these two extremes (i.e. the middle class or middleincome people)? I think that the middle income people would have more struggles as opposed to the ‘poor’ group. My thoughts are mainly based on this idea that if you are poor, you may live a lifestyle that is more driven by your needs (e.g. You would have labeled a RM300 budget phone as smartphone). On the other hand, people who are in the middle-income group may have their lifestyle mainly driven by their wants. Hence, they may base their decision-making process on ‘want’ rather than ‘need’. (e.g. You will probably be purchasing a smartphone that requires you to spend RM5,000++). Moreover, the middle-income group would also have the ‘privilege’ of being offered credit card services as opposed to the group of low income earners. On top of credit cards, by saying ‘yes’ to the recorded script from telesales call, their bank account will have more money in the form of cash advance, or personal loan really easily; hence, the term ‘easy credit’. This makes the middle-income group the people who are susceptible to becoming cash cows to credit lenders. They will eventually find themselves with more credit outstanding than their savings. Therefore, this group is, in my sincere opinion, the ‘handicapped’ group; not much better off than the low-income earners actually. How, then, can the middle-income group reduce their disadvantage and propel themselves towards their aspirations and dreams? Below are some ideas that one can explore:

You start with awareness The idea that you need money to invest is like asking whether the chicken comes first or the egg comes first. You cannot wait until you have money only to start thinking about investing it. Contrary to popular belief that we only can manage our financial affairs once we have surplus, it is actually those who can have surplus are those who have done the bulk of the financial planning, and then how to implement the plan.

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Cash-flow management is crucial It is because you have started managing your cash-flow and debt obligations that you would end up being in a position of having surplus. Without surplus, it would be impossible for one to have savings.

“We all need

to have a process to manage our financial affairs…

Protecting your savings is important If you agree that it is not easy to accumulate savings nowadays, you better learn to protect it. Hence, we cannot overlook risk management as this can help protect our savings when any possible event that could lead to a financial loss.

Watch your credit behaviour Many who are in a credit card or debt crisis have once told themselves that they would just use the credit card for rebates and free-gifts and that they would make sure they pay the billed amount every month, except the only trouble with this plan is that before you know it, you are barely making minimum payment, and it ballooned to become a huge outstanding in no time. Moreover, interest payment is one of the tiny leakages that will have long-term impact on your ability to save.


Starting early but small is more important than starting later but big Number of Years

1/Yr

Initial Savings

Yearly Savings

Future Savings

25

10.00%

-12,000

0

130,016

25

5.00%

-6,000

-2,400

134,863

Past performance is not an indication of future performance.

A person who starts investing with RM12,000 today and adds no new contribution following that will need an investment that generates 10% p.a every year to have RM130,016 twenty five years from now. On the contrary, another person who starts with 50% lesser of the capital (50% of RM12,000 = RM6,000) would require an investment that is 50% less risky (5% p.a.) throughout the same time period, and this person will have RM134,863 of wealth. The trick is to cultivate the discipline of adding RM200 a month to the saving pot. It is much easier to save smaller amounts of money than to wait for your capital to become significant, since smaller amounts can also grow to become a substantial amount of money. So, why delay?

You need to stay ahead of inflation A person who invests the savings in a way that is right and is inline with his risk capacity will see his wealth grow and become inflation-proof in the long run. If you do nothing about inflation, you will find it more and more tough to maintain your lifestyle. This is due to your shrinking purchasing power. You will then find that your freedom will be limited by your purchasing power, and it will become worse if your income does not grow fast enough. When you invest your wealth, you put it to work for you.

You need to work on your investment literacy A person who is poor may have low disposable income to help to build on their nest egg or investment unless their income is sufficient to provide for their basic needs. However, a person who belongs to the middle-income group may have some disposable income after taking care of his lifestyle wants and with that, have a need to invest the cash-flow surplus. This gives rise to the possibility whereby some scammer will get to ‘steal’ money from you, or that bad investing decision will be made, thus resulting in losses or wasted opportunity. Therefore, it is important to have some kind of foundation of investment literacy, so that you will know how to make the right decision, with due diligence, on investment proposals that are presented to you.

Financial planning is not for cheapskate human beings One of the misconceptions is that when we embrace financial planning, we will have to accept a frugal lifestyle. However, the whole point of financial planning is to put the aspirations and life goals of a person at the core. As such, it would rather be counter-intuitive if you will have to live a frugal lifestyle. If you embrace financial planning, what you essentially will do is that you look at your personal finances in totality, then make decision that are smarter, that are less attached to your urges and emotions for instant gratification. It does not involve you having to eat less, or to not go out with your friends. We all need want a happy and healthy life, so we should build our networks and make better decisions. No matter if you are rich or poor or trapped in between, I would say that we all need to have a process to manage our financial affairs to ensure that at the end of the day, we will have the ‘financial muscle’ to help us achieve our life goals. Financial muscle in this context simply means having enough savings, and having the ability to achieve our life goals. Disclaimer: The information in this article has been obtained from public sources believed to be reliable and the opinions, analysis, forecast, projections and expectations (together “Opinions”) contained in this presentation are based on such information and are expressions of belief only. This article should not be construed as an offer document or an offer or solicitation to buy or sell any investment. Readers are advised to consult a professional for advice before deciding or making any decision to invest as investment is a long term process and past superior performance is not indicative of future performance.

About The Contributor

Kevin K.M. Neoh

is a licensed Financial Planner by the Securities Commissions Malaysia and Bank Negara Malaysia.

Feb 2018 |

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FINANCE STRATEGY

Setting Your Financial Goals

The importance of making a plan In a football game, the objective of the players is to get the ball into the opposing team’s net. They make move after move, adopt one strategy after another, all to bring the ball forward and into the goal. Now, could you imagine playing football with no objective? All your favourite players will simply run around this huge green field with a ball, not going anywhere, not achieving anything, but worst of all—not scoring any GOAL! There is no football game without an objective. Just like football players, you also need to have objectives or goals in your life. Goals help give you direction, as they guide you towards achieving the life that you want. Without goals, you may wake up one day just to realise that the best years of your life have gone by and you have yet to achieve anything! Aside from being an essential aspect of daily life, it is important to note that money is a vital tool to help you work towards your goals in life. As mentioned, you need to manage your money through financial planning. One of the steps in this process is to set your financial goals.

How to set your financial goals? Your financial goals will help you determine where your money will come from and where it will go. When setting your financial goals, pay attention to what you value and believe in life. Without knowing what is important to you personally, it will be difficult to set satisfying financial goals. When you understand what your values and beliefs are, you will find it easier to set financial goals that you can achieve. Write down your financial goals. Just by having these goals in your thoughts are not enough. You are very likely to forget the goals that you have set or you may even have unconsciously changed them in your mind. Writing down financial goals will increase your chances of achieving them. When writing down your financial goals, be as specific as possible. What is the point of writing: ‘My goal is to have lots of money in the bank.’ What do you mean by ‘lots of money’? Is it RM50,000 or RM500,000 or RM5,000,000? Be specific and write your goals in terms that can be measured. Break down your goals into those that are short-term, medium-term and longterm. Below are some examples of such goals:

Short-term goals (less than 1 year) • Save RM5,000 in six months • Pay the deposit for a new car

Medium-term Goal (1-3 years) Pay the down-payment of RM 20,000 for my first house

Long-term goal (more than 3 years) Save RM100,000 within five years for my retirement account

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Saving for emergencies

These statements will help you to:

What would happen if you suddenly cannot afford to pay for your education? Would you sacrifice your goal of attaining a degree or would you have an emergency plan? In life, there are many uncertainties that you might face. Unexpected events, which may be disastrous and unfortunate in nature, can happen to you or members of your family e.g. from a minor breakdown of your vehicle to the death of the sole breadwinner in your family.

• Provide information about your current financial position and a summary of your income and expenditure • Measure your progress in meeting your short-term, mediumterm and long-term financial goals • Maintain information about your financial activities, such as investments and spending patterns • Provide data that you can use when preparing tax forms or applying for a bank loan

In most of the situations, money would be needed. It is extremely important that you are always prepared with the right tools and knowledge for situations that require you to think on your feet and deal with problems you might not be used to otherwise. An emergency fund is one such tool that you can use. When you list your financial goals, include savings for an emergency fund. As a general guideline, have an equivalent of at least 6 months’ worth of your basic living expenses in your emergency fund. It is desirable to put aside about 12 months’ worth.

Assets and liabilities—enhance your net worth In financial planning, you need to assess where you are now in financial terms, i.e. what do you own and what do you owe, how much money do you have and after making the various payments, how much money there is left.

Your personal balance sheet reports on what you own and what you owe: What you own (assets) Include items such as cash, savings, real estate, unit trusts or shares in companies What you owe (liabilities) Include all types of loans, whether to your bank, family or friends, as well as credit card debt and payments that are due, such as house rental and utility bills All plans begin with establishing financial goals and are guided by a financial plan. You should review your current financial status with help from the financial statements mentioned above and start to gather all other financial data to develop a comprehensive plan.

When doing this, two types of personal financial statements come in handy: (1) personal balance sheet and (2) cash flow statement.

About The Contributor

Dr Desmond Chong Kok Fei

is a Trainer & Head of the Financial Education Department, Agensi Kaunseling & Pengurusan Kredit (AKPK) with over 25 years experience in marketing and management.

Feb 2018 |

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FINANCE STRATEGY

Preserving your Estate Values for the Future Generation We often hear people saying ‘location, location, location’ as the main criterion before buying a property. We hear people having properties in many different areas. We also hear them bragging about how much their properties have appreciated in value. But, is that the only consideration they should think about? Buying a property is one of the most important milestones in one’s lifetime. But one should look beyond the present and protect the future as well. What do I mean by this? There is no doubt that properties are one of the most preferred investment decisions any individual will make. Successful investing involves not only the ability to recognise and act upon opportunity, but it also involves the importance of guarding against significant loss. Avoiding catastrophic loss and preserving capital as a first priority helps ensure that investors stay focused on their objectives. Are your properties considered Asset or Liability? An Asset is a resource with economic value that an individual or corporation owns with the expectation that it will provide future benefit(s); whereas a liability is a financial debt or obligations that are settled over time. My question to you, ‘Who will inherit your properties?’ You will most likely think this is already taken care of in your will. My next question will be this: is/are the properties free from encumbrances or mortgage? If there is/are still outstanding liabilities, who do you think will inherit your outstanding loans? For those who have the good fortune of successfully building a substantial estate, it is time to think of protecting its value. Without proper planning, the value of the estate could just as easily be destroyed or is reduced significantly when the owner dies. In estate planning, this is known as the conservation phase. Before the conservation phase is the accumulation phase. However, there is no distinct nor dividing line between the accumulation and conservation phase. Both phases can run concurrently. The planning for the accumulation phase includes conservation component, which is to preserve the value of existing assets in the estate. This includes taking into account the type of taxes, transfer costs and final expenses that can deplete the property value of the deceased and arranging for economical funding mechanism to cover those costs.

To protect one’s estate through estate planning, three key objectives have to be met, i.e.: 1. The lessening of estate transfer cost(s) 2. The selection of suitable funding instrument to pay transfer cost that cannot be eliminated 3. Reorganising the estate property to minimise lost of values The whole point of the conservation phase is to preserve the largest possible portion of the estate in the process of its passing to the beneficiaries. All the laws that will work against and for the estate will have to be considered. To achieve this end, it is also necessary to identify and analyse the causes of shrinkage; to institute steps to diminish their impact on the estate. After this is done, it is an important step to arrange for cash to defray costs that cannot be dislodged or further reduced. If there is not much liquidity, which is often the case, then your estate may have to be tapped to pay the estate administration cost. Once that happens, you can kiss your estate goodbye.

Factors Contributing to Estate Shrinkage There are many things that can cause an estate to shrink, many of which can be controlled through proper planning. Here are some factors: • Final Expenses • Costs of Estate Administration • Debts and Liabilities of Estate Owner • Creditors • Unsettled Income Taxes* • Estate Duty/Inheritance Tax Malaysia (was abolished in 1991) • Losses due to Liquidation of Business • Losses due to Forced Sale of Property

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Proper Estate Planning Will Avoid Shrinkage of your Estate ESTATE PLANNING FUNNEL *Inland Revenue Board (IRB) is empowered in accordance with Section 74 and Section 106 of the Income Tax Act 1967 to claim a deceased’s outstanding tax from the rightful nextof-kin. Section 74 of the Income Tax Act 1967 states: “Where an individual dies in the basis year for a year of assessment, his executors shall be assessable and chargeable to tax for that year of assessment, for the following year of assessment and, whenever necessary, for any previous year of assessment in respect of the chargeable income of that individual for any such year of assessment; and, where they are so assessable and chargeable, they shall be assessable and chargeable to tax in like manner and to the lie amount as the individual would be assessed and charged to tax if he had not died.” In simpler terms, this basically means the Act allows the government to recover tax due and payable through civil proceedings as a debt due to the government. The deceased will be assessed and charged to tax as though if he had not died. IRB has the power to collect outstanding taxes from the next-of- kin even the individual is dead. Premature death, medical treatment costs, other final expenses and subsequent costs of administering the estate during the period of probate can be devastating to the surviving spouse at a time when income is cut off or has become uncertain. This problem is often compounded by the need to pay any unpaid income taxes and estate duty (where it applies).

About The Contributor

As such, your estate may be an asset to you during your lifetime but it may be a burden or liability upon your demise. The impact of estate shrinkage can be reduced by careful planning. Only 10% of eligible Malaysian has a will, but how many actually has a comprehensive estate plan? You have worked hard to provide a better living for your family but you may not be there forever for them. Should the unfortunate happen, do you want your family to continue with the lifestyle which they are currently enjoying? Do you want your estate to be transferred to them without having them go through all the legal and administrative hassle? On top of that, you can relieve your family from the burden of funding the execution expenses. Duration of the Estate Administration process depends on the complexity of the Estate. The emotional upheavals that may occur to people on the sudden death of their loved ones can be disorientating. And it would certainly add to their problems if there were insufficient cash at hand to satisfy the costs of administration that follows. Hence, one of the most important aspects of an estate plan is to ensure there are liquid funds available to settle these costs. Here are my questions to you to reflect: Are your current assets enough to meet your wishes? Yes, you may have Assets – BUT, how many of them are liquid? Step 1: How much funds are immediately needed upon death? Step 2: How much funds are available to the deceased’s family? Step 3: Where will the funds come from?

Elaine Quah

is Managing Partner of EPOWER & Associates and Your Financial Tailor TM. For more information on estate planning and/or other services, contact her at elaineqsc@epa.net.my or call her at +6012-3938909.

Feb 2018 |

29


NEWS & EVENTS

THE FIRST KL INTERNATIONAL HALAL EXPO Armani Media Sdn Bhd, a Kuala Lumpur-based media and event company has recently launched Malaysia’s first KL International Halal Expo on 13 & 14 January 2018 at the Mid Valley Exhibition Centre in Kuala Lumpur. Fully supported by the Jabatan Kemajuan Islam Malaysia (JAKIM), the expo featured over 60 booths displaying a wide variety of local and international Halal brands including Starbucks, Cadbury, Hyundai and Gintell. The expo was to become a platform for the global Halal industry to converge and promote various Halal brands, products, knowledge and awareness.

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NEWS & EVENTS

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Other activities held during the expo include appearances by local celebrities such as Fattah Amin; Ziana Zain; Umie Aida and Rozita Che Wan, cooking demos, makeup tutorials, knowledge sharing sessions, and lucky draws with prizes worth up to RM30,000. A special programme focusing on corporate social responsibility (CSR) was also held during the event. Its main objective was to provide visitors the opportunity to get to know and learn about organisations that are meaningful. These organisations include but are not limited to the Breast Cancer Welfare Association, World Vision and UNICEF. The expo was officiated by YB Datuk Wira Dr Abu Bakar Mohamad Diah, Deputy Minister of Science, Technology and Innovation. For more information on the KL International Halal Expo 2018, please visit www.klihe.com.

14 January 2018

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Entrepreneur Insight February 2018  
Entrepreneur Insight February 2018  
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