Budget 2015: The People's Economy... What's in it for YOU ?

The much awaited Budget 2015 was presented by our Prime Minister at Cabinet today. Looking on are hopeful Malaysians with their never ended wish lists, which already submitted via various channels. Does your wishes being addressed in the budget?

The People's Economy...

This is the title for Budget 2015, which referring to an economy that based on the daily lives of the rakyat. Very obvious, this is to address the concerns of the rakyat towards the implementation of GST soon.

What's in it?

Here, we only highlighting a few key points which related closely with most Malaysians:

1. Several infrastructure projects will be implemented:
• Sungai Besi - Ulu Klang Expressway (SUKE)
• West Coast Expressway from Taiping to Banting
• Damansara - Shah Alam Highway (DASH)
• Eastern Klang Valley Expressway (EKVE)
• East Coast railway line along Gemas-Mentakab, Jerantut-Sungai Yu and Gua Musang-Tumpat
• 2nd MRT Line from Selayang to Putrajaya
• LRT 3 Project, linking Bandar Utama to Shah Alam and Klang
  
  
2. On GST, an additional lists of items that will not be subjected to GST as follows:
   
   
   
   
   
   
   
3. In addition, GST free for electricity consumption be increased from the first 200 units to 300 units.
   
   
4. No GST for the purchase of RON95 petrol, diesel and LPG
   
5. YA2015 for individuals and households:
• Individual income tax rates will be reduced by 1% - 3%
• Tax payers with family and income of RM4,000 monthly will not have tax liability
• The current 26% individual income tax will be reduced to 24%, 24.5% and 25%
  
  
6. Corporate Tax:
• YA2015: Cooperative income tax rate will reduced by 1% - 2%. Secretarial fee and tax filing fee are allowed as deduction
• YA2016: Corporate income tax rate will be reduced to 24%
• YA2016: Income tax for SMEs will also be reduced to 19%
  
  
7. PTPTN Loan:

• 10% rebate given to borrowers who continuously make repayments for 12 months until 31 December 2015.
• 20% discount to borrowers who make lump sum repayments from now until 31st March 2015.
  
  
8. Youth Housing Scheme... What's the terms and conditions ?
• Smart partnership between Government, Bank Simpanan Nasional, EPF and Cagamas
• For married youth aged between 25 - 40 years
• Household income not exceeding RM10,000
• Maximum funding for 1st home is RM500,000
• Maximum loan period is 35 years
• Government will provide monthly financial assistance of RM200 for first 2 years
• 50% stamp duty exemption on instrument of transfer agreements and loan agreements
• 10% loan guarantee to enable borrowers to obtain full financing including cost of insurance
• Only for 20,000 units offered on a 'first come first serve basis'
  
  
9. Goodies for students:
• Jan 2015, RM100 each be given to all primary and secondary school students
• 1Malaysia Book Voucher of RM250 per student
  
  
10. Expenses incurred for treatment of serious diseases are given tax relief up to RM6,000 per year (from RM5,000 currently). This is available to tax payer, the spouse and children.
    
    
11. Increase tax relief for each disabled child from RM5,000 to RM6,000
    
    
12. Home ownership:
• PR1MA with 80,000 units to be build
• Ceiling of household income is raised from RM8,000 to RM10,000
• Rent-To-Own scheme will be introduced specifically for individuals who are unable to obtain bank financing
• Extending the 50% stamp duty exemption until 31st December 2016
• Increase the purchase limit from RM400,000 to RM500,000
• Skim Rumah Pertamaku with ceiling price raised to RM500,000, and age of borrowers to qualify for the scheme increased to 40 years old
  
13. BR1M will be continue:

• RM950 for households with monthly income of RM3,000 and below. It will be disbursed in 3 installments in Jan (RM300), May (RM300) and Sept 2015 (RM350)
• RM750 for households with monthly income between RM3,000 and RM4,000. It will be disbursed in 3 installments in Jan (RM200), May (RM200) and Sept 2015 (RM350)
• RM350 for single individuals aged 21 and above with monthly income not exceeding RM2,000.
  
  
14. Half-month bonus for civil servants with minimum payment of RM500 to be paid in Jan 2015. Meanwhile, Government pensioners will also receive special financial assistance of RM250.

Corporate Doublespeak

One of my pet hates is corporate jargon or management-guru speak. I'm the Head of a Management School and I don't understand what people mean when they use corporate jargon. After sharing my pet hate with my colleague Alan de Bromhead, Alan kindly send me the video below where 'Weird Al' Yankovic lampoons corporate doublespeak and meaningless buzzwords in song - click here to learn more. 

Internships & Fresh Graduates' Positions

Murasaki ts (a MSC status company) is looking for two interns and two full time positions for fresh graduates. If you are interested to get a footing into the world of finance, markets and immerse in the energy of a start up, we would like to hear from you.

Our office is located at Solaris Mont Kiara. Email CV to: joanne.tee@murasaki.co

More information about the company can be obtained by visiting www.murasaki.co

Pickings From The Carnage

The sharp correction in small caps, weighed in by sagging oil prices, has now yielded some good pickup opportunities. In my view, there won't be a major correction, not with interest rates still at such low levels, even another hike up or two won't be sufficient to derail the liquidity, astute recovery in the US and pockets of EU. (Price charts courtesy of Murasaki ts).

NiHsin Resources - Substantial bulks of the shares have crossed over the last couple of weeks indicating new forces at the helm. Whispers of a good O&G outfit will be injected with new influential directors coming on board. Wheels in motion. Good opportunity now considering it was trying to break 56 sen a couple of weeks back.

Ideal Jacobs - Based on my previous postings, the deal has already be signed and submitted. Coupled with the 1 for 2 free, its a steal below 45 sen. Can buy to hold for exercise.

GBH - The Dynac RTO being called off is bad, at least there is over RM190m cash coming in. Coupled with existing cash balance of RM45m, we are looking at a company with NTA of almost RM1.50 with more than RM1.20 per share in cash. I can see no other "more attractive counter" for RTO with that amount of cash inside. Plus they have to do it with the next 12 months. Way oversold. I see fair value when you include the premium for a Main board listed counter at RM2.00 before any suggestion for an RTO, and the warrant convertible at RM1.00 by2020 is ridiculously over sold as well.

Ireka - A no brainer as their main asset will be unwound and delisted which will bring forth a likely cash dividend of almost RM1.00. Only issue is investors will have to hold for 6-12 months for value to be unlocked.

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). I may already have positions in the stock mentioned above. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

Here's Why Oil Prices Are Sagging

Its FRACKING ... or shale oil. Almost without warning, the US is almost self sufficient in oil. The map from Fortune is amazingly clear. The US already produces as much oil as the following combined countries: Venezuela, UK, UAE, Ukraine, Libya, Oman and Ecuador. All the less reasons to go to war from now on.

FORTUNE: U.S. oil production suddenly rivals that of some major exporters.

The U.S. is in the middle of an oil boom. Over the past several years, advances in fracking technology have allowed the U.S. to tap into its vast reserves of shale oil, making the country one of the world’s largest producers of crude, upending the global energy marketplace. With nearly two-thirds more output now than six years ago, the U.S. produces 8.4 million barrels of crude per day. That’s still less than Russia, but more than twice as much as Iran or Canada. Texas alone now out-gushes the United Arab Emirates, Mexico, and Nigeria. Forget OPEC—meet the new league of oil-producing states, the united ones. (click the map to enlarge)

What is Inflation?

Over the next number of weeks, I will be posting several Bank of England videos explaining what inflation is, why it matters, and why it happens.

Is it Viable to opt for Fixed Rate Loan currently? (Oct 2014)

In anticipation of rising interest rate environment, would fixed-rate loans be a better option for borrowers? To recap, Bank Negara Malaysia, for the first time since 2011, raised the benchmark reference rate OPR to 3.25% in July 2014. While many anticipate that there will be another round of hiking soon, should loan borrowers opt for fixed rate loan?

What is Fixed-Rate loan?

By fixing your interest rate upfront, fixed rate loans protect borrowers from future increases in Base Lending Rate (BLR). In other word, the repayment amount will not be changed during the entire loan period.

Who is suitable for fixed rate loan?

Perhaps, if you are looking to avoid any volatility, in terms of interest rate movements, you may opt for fixed rate loan. However, it's not necessarily so in terms of paying lower interest rate. 

Why say so?

Normally, the interest rate on a fixed rate loan was set slightly above what you would be quoted for a floating rate. So, if the financial institutions expect rates to rise, they would quote higher fixed rates too !!! If you think you're clever, your banker also not stupid...

So, how to make decision?

To decide, one must know where are we today and how much more interest rates will rise. With the current BLR of 6.85% coupled with a discount of 2.4%, the net interest rate borrowers are serving now is 4.45%. As far as we know, the average fixed interest rate currently available is 5.00%, which is 55 basis points above current floating rate.

Based on historical OPR movements, there is just another 25 basis points to reach the pre-crisis level of 3.50%. Meaning, there is still another 30 basis points to go beyond the 3.50% OPR level before reaching the fixed interest rate. Since there is still a wide gap to reach the 5.00% level, it's not so attractive to take up fixed rate loan currently.

What do you think?