Tuesday, January 24, 2006

A Tribute to Embok

A few days ago, my sister sent me a message that my former neighbour in the village, Embok Patonah had passed away. She used to be my parents neighbour for some years. When I was a kid, I used to follow my older brother to play her place. My older brother and Jumak (Embok’s adopted son) were buddies; they went to school and played together. I was just tagging along that time. My earliest memories of Embok’s place were an ordinary kampung house built of wood with zinc roof, with two distinct sections, the large lounge (so that it will fit everybody during kenduri) and the large kitchen area. Attached to the kitchen was the goat house. They had these beautiful rattan lounge suite which I loved to sit on. We used to play badminton at her place and whatever games we can think of. The late Embok Patonah was married to the late Embah Somo. Embah Somo died back in 1985 or 86, I can’t really recall. Embok Patonah was born in the village and still has relations in my village, my neighbour Cikgu Tahiron included. While Embah Somo is a Sundanese from Java. When Embah Somo was a young man, he used to be a cook, with a merchant ship. His skills as a cook come handy in the village. During kenduri times, he used to single handedly manage the work in the penanggahan (kitchen), organizing everything. Being enterprising, Embok Patonah and Embah Somo used to buy bananas and vegetables from the villagers and sold them at Tanjong Karang market. She also made good tempeh that fungus coated soya bean delicacy which originated from Java. After Embah Somo died, with help from Jumak, she still continues on selling tempeh and lontong at the market, but after some years, she becomes incapacitated and couldn’t use her legs anymore. Thing started going downhill from then on, Jumak had to go to the city to find a job and she lived alone in her old house, her daughters married and lives somewhere else. When her old house becomes unliveable, Cikgu Tahiron built a house for her on his land, next to my father’s place.
In the last few years, she went to live with her daughter Siti Kapiah in Sepintas, Sabak Bernam. That’s where she died the other day.
Yesterday while searching for pictures on Tanjong Karang I came across the picture of Uncle Mat Isa, he is the older brother of Cikgu Tahiron. I haven’t seen him for years, but he was also my parents neighbour before he moved to Kg. Sungai Kajang.

Monday, January 16, 2006

What now Proton?

Some people at Proton must have been sleepless these past weeks. Everything the management and board did turn sour. The future of thousands of Proton staff and workers are at stake. Two bad news in one week is enough to spook investors to ditch Proton shares, and fall it did. It seems that small shareholders in Proton have fundamental disagreement with Proton management. The small shareholders voted with their feet, no collaboration means no future value for Proton, it would burn out its capital until no value left. The management and board want independence, because it is a national entity, while asking for support and collaboration from VW. While VW want control in decision making and operation – a takeover in short.
From the commercial point of view, the reason VW was talking to Proton in the first place was to gain a sizeable market share in a growth market - ASEAN. If VW want to build brand equity, it must churn out quality reliable product, a product that consumer can trust and the investment would be huge. As such, it is understandable that VW want nothing short of takeover. Would you invest your money now, not getting any return for the next few years, and when the project started to bear fruit in 10 years time, let someone else reap the dividend? Without majority board control, VW would run the risk of being sidelined later.
First VW announced that they are now not interested in continuing talks of collaboration with Proton then came denial of Mitsubishi that they would help Proton in any way in the future. The funny part is in the snub, yes Proton board and management was snubbed by VW, they didn’t tell Proton about their decision, but tell the media in a far away country.

Would Proton be able to compete in deregulated auto market without outside collaboration? The country’s industrial might and reputation is at stake here, and the stake is getting higher by the day. If you read industry news, DaimlerChrysler and Toyota have invested USD1.2billions each in computerised manufacturing system designed by Dassault Systeme whereby they can cut the time taken from design to prototype from 3 years to 4 months. This would involve complete collaboration between carmaker and its suppliers, because any new design, whether in shape or material has to be tested for compatibility like flexing and bending. Instead of building the component prototype and testing it, the computer system can predict and give compatibility result. So in the not too distant future you can expect to be able to design your own personal car on a company’s website, pay for it and have it delivered to your place in a few of months. The success of VW Beetle and Chrysler PT Cruiser shows that a car can be fashion statement, and this is where you get the juiciest margin.
Would Proton be able to go down this road on its own? I doubt it; its market share is just too small to justify the investment needed. Toyota churned out over a million cars each year from its plants in many countries.
The other choice is for Proton to downgrade a bit, just be contract assembler manufacturer for other car companies, but I guess there are other players in this category, Naza, Oriental and Tan Chong among others.

Tuesday, January 10, 2006

Is residential investment oversexed?

Title: Is residential property investment oversexed?
I was discussing and arguing with a friend about the merit of residential property investment as a surefire way to accumulate wealth. I admit that there are benefits having your own residential property to live in.
• Property/real estate is your own place under the sky. You can sit on it, feel it and do whatever – your very own place.
• If you own the residential property you live on, you are your own landlord, unlike tenant who might be ejected to the street by his/her landlord.
• Banks and financial institutions are more than willing to give loans on property.
• The property itself can be used as collateral should you need money for something else.
Safe as houses right?
Well let me qualify that expression, safe as houses.
Rule number one; you must insure your property – building, chattels and improvements. Remember Hurricane Katrina and Asian tsunami. In an unlikely event like that, even your land might be swept away, and your million dollars home might worth nothing the day after.
Would the value of houses continue its upward trend?
That depends on a lot of factors, economics, politics, birth rate, ecology and whatever else.
• If the economy is growing, the populace getting richer and wealth of the country is evenly distributed and not concentrated to select group of people (ruling class etc) then there is every chance of increasing demand – the value and price of residential property ought to increase in value.
• The country must be politically stable, a simple unrest and small wars would adversely affect property prices.
• Growth and increasing prices go hand in hand. Don’t buy property in countries with declining population, that’s why some countries encourage immigration to counter their declining birth rate.
• Ecology and the environment, plays an important part. People don’t just work and work, they also want to play and enjoy some recreational activities. That doesn’t mean putting up playground with swings is enough. Ever wonder why residential properties by the sea and lakes fetch higher prices?
Even those factors might not be good indicator. It’s all come down to supply and demand. Any factors that affect supply and/or demand would undoubtedly affect future prices. An economy in recession would mean correction in asset prices is still in progress, and asset prices are expected to fall, residential properties included.
A good indicator future house prices is the housing starts numbers published by government statistics department.

Let’s assume we made up our mind to include property in the mix of our investment portfolio. Check out what are the prevailing interest rate in the market for deposit and mortgage and the tax structure in the country. Is capital gain taxable?
If the prevailing interest rate is 5% for deposit, the income generated from the property should also be at least 5% to make it profitable. Income could be from cash flow generated from renting out the property and the expected capital gains from increase in value. If you are in high tax bracket, you could also rearrange your income and reduce your tax by setting up a company, put your income into the company and make property or any other form of investment to reduce your tax burden.
• What is the market value of the house?
• New building cost of a house of similar quality.
• Market interest rate.
• Mortgage rate.
• Rental market rate.
• How much is the tax benefit?
• Local government rates (to pay for services such as sewerage, road and parks).
• Maintenance costs and other costs such as insurance.
• Depreciation.
Unlike investment in companies, commercial properties and businesses, residential property does not generate future wealth and income for the country if it doesn’t generate income. It consume capital, if you pay one million dollars for your house, and live in it, given that interest rate is 5%, you are consuming $50,000 worth of capital annually. If you just deposit that million in the bank, you could have earned $50,000 in interest less tax.
As for me, I would rather invest in companies and businesses, or even deposit the money in the bank, because the money would generate wealth and income for me and the country.

Monday, January 09, 2006

The Butcher of Palestine

ariel sharon, (no I wouldnt print his initial in capital letters) is dying. So he got away with massacre murder and what have you, and got to be a prime minister to boot. Who else could murder and massacre a whole village of Palestinian and reprisal for the murder of a housewife?
Then after he invaded Lebanon, he let christian phalangist militias massacre hundreds of Palestinian refugees at Shabra and Shatila. its good that there is none left of those Lebanese Phalangist in Lebanon, they all run to israel afraid of the judgement of the people of Lebanon.
ariel sharon and his murderous gangs escape justice so far.

Monday, January 02, 2006

Hotel California

Title: Hotel California
It was summer of 98. Mamat had just arrived in Christchurch for 5 month, and at his wits end trying to find a job, any job at all. In the end he took a commission only job selling vacuum cleaner door to door. After two months working in Christchurch, 5 of them, Roland, Mamat, Kate, Zack and Phil were assigned the West Coast, Wanaka and Alexandra to work on for a fortnight. Steve and Katie stayed back at the office, holding fort.
The first town after Hokitika was Ross, basically a one convenience store town. The shop also sells fish and chip, liquor and act as a post office. Two rows of houses on either side of the main road, with primary school at the edge of town. They didn’t work on Hokitika, because 3 weeks previously they have spent two days on the town. Katie and Steve from the office came along on that trip to help out. They rented 2 motel units that time. Being the only woman on that trip, Katie had to share a room with another; she didn’t want to share room with Steve, “yuck, not my type” she said later, so she climbed into Roland’s bed. They have been together ever since.
The days were spent on driving the country roads and knocking on doors selling vacuum cleaners, and the night were spent watching TV and playing gin rummy at the motel.
One memorable motel room was 40 kms south of Franz Josef glacier. One room had mirror on the ceiling. Imagine that, if you lie down on the bed naked with your girlfriend, you ca see yourself in the mirror on the ceiling. They let Roland, the team leader sleep there, jested that he should have brought along his girlfriend, Katie for this trip. Mamat remembers the song by the Eagles – Hotel California.
In the dark desert highway,
Da da …da da.
Mirrors on the ceiling, and champagne on ice,
We all are prisoners here, of our own device.

The lady owner of the motel said that a man from Christchurch built the motel. He had a wife and family in Christchurch but also have a girlfriend in Franz Josef, and he built the motel for his girlfriend to manage. That room with mirror on the ceiling was a special place for them.

Jackson Beach
The next day they continue to Haast, where they stayed at a motel refurbished from a Ministry of Works old depot. They travelled along the coast to Jackson – an old Maori settlement in the 1800’s but no one lives there now. There were relics from the whaling days, giant cauldrons, whalebones as well as a deep-water port. Mamat walked around, feeling the whalebones, climbed into the cauldron and walked down the pier. Kate followed like a puppy.
There were holiday baches 20kms or so down the road, with white sandy beach that goes for miles. The water was warm – around 15 degrees in summer.
Mamat was sitting on the beach enjoying the sunshine and peaceful view. Kate was lying down on her stomach sun tanning her back. The three other guys – Roland, Zack and Phil drove up the road. Later Kate went for a swim.
Kate called out for Mamat, but he couldn’t make out what she said. He thought she was in trouble. So Mamat took off his shirt and rolled up his trousers, wade knee deep to the water.
“Come join me for a swim”
“I can’t swim” he replied.
“I’ll teach you,” she said.
Mamat went back to the beach and took off his trousers, then went back to the water just in his underpants.
She taught him not to fight the waves, but went along with it. He also learnt to float. Kate was a slim girl about Mamat’s height, five foot six, and her skin was slightly tanned.
“Could you please stop looking at my breast?”
“I can’t help it.” he replied.
They had enough of Tasman Sea after an hour or so in the water. Looking back to the beach, their three friends were looking out to the sea. Time to go back.
“Whoa man, you have been skinny dipping with Kate.”
Mamat just flashed a smile.

Later on the van back to Haast, Kate complained of being cold. Mamat took of his jacket, and draped it over Kate’s shoulders. Kate flashed a smile and that puppy eye look of hers.