UNDER the FundMyHome (FMH) scheme, the 20% that a buyer pays towards the house price is put into a trust in order to generate the investors’ 5% annual yield. Two banks and others fund the balance 80%. Developers get this 80% pronto.
If the property, independently valued, rises on the fifth year, the developer gets his balance 20%. From the developer’s point of view, FMH helps to reduce unsold units.
After all, in a conventional mortgage, he is already giving 20% to 25% rebates. With FMH, there is hope that he would get the remaining 20% five years later if the price goes up.
As for the buyer, he can buy the remaining 80% at the prevailing market price. If he cannot afford to do so, he can roll over another five years by topping up the 20% – if he has the means. Or he can sell.
In the event he is unable to do all three, he loses whatever he has invested.
Although he may be debt-free in the sense that he is not tied down by a mortgage loan, he would have incurred a loss if he does not take up the property.
It is not completely true to say that he pays only 20% and need not pay anything because he has to pay the monthly maintenance and upkeep of the house. If he were a tenant, the landlord picks up the tab.
Let’s consider Malaysia’s first rent-to-own scheme HouzKEY by Malayan Banking Bhd (Maybank). The developer hands over a certain number of completed units for a few months. Once tenanted, Maybank buys over the unit, with the hope that he migrates to be a buyer and takes up a loan after a year when the purchase option is unlocked. If he walks away, Maybank has the right to ask the tenant to bear the cost of repairs.
Under FMH, who bears the cost of repairs after the buyer walks away?
Malaysia needs to widen its rent-to-own options to give robustness to the housing sector. The emergence of alternative funding is noteworthy, but it also underscores very serious flaws in the housing market.
Pos Malaysia Bhd’s recent second-quarter losses were shocking and grossly missed consensus expectations.
However, it is also a reminder that the advent of digitalisation cannot be stopped. With the traditional art of letter-writing dimming, postal services worldwide are feeling the heat from digital disruption.
The challenge is for postal services to continue to meet expectations, while at the same time adjusting to the new environment. Pos Malaysia recorded a net loss of RM16.58mil for its second quarter ended Sept 30 from a net profit of RM18.83mil previously.
The losses were contributed by its postal services and international segments. Nonetheless, Pos Malaysia is also beleaguered with a higher cost of sales, operating expenses and finance costs.
Meanwhile, revenue was almost flat, up 0.27% to RM588.73mil, mainly propped up by its courier segment. The courier service was backed by increased demand in e-commerce as well as online business customers.
Pos Malaysia has seen some RM635mil being erased from its market capitalisation in the last two days to RM1.87bil.
Sure, the company may be in a net cash position, but it is still trading at a price earnings ratio of 79 times. This means there is ample room for the stock to continue falling.
Should shareholders of Pos Malaysia cut their losses or give the company another go at reviving its fortunes?
Pos Malaysia’s largest shareholders are Hicom Holdings Bhd, DRB-Hicom Bhd and the Employees Provident Fund at 31.4%, 22.1% and 9.9%, respectively.
Going into 2020, the outlook looks uncertain at best. Externally, the environment is indeed getting tougher and more competitive.
Internally, though, Pos Malaysia has high operating costs, loss-making post offices and unionised workers to deal with.
Looking ahead, Pos Malaysia has said it is optimistic that its courier and aviation businesses would do well, but is mindful of the substantial challenges in its postal services, and international and logistics business.
For shareholders to give Pos Malaysia a second chance, it needs to firm out its plan to become more productive, introduce more products and grow its e-commerce business.
Cutting cost alone will not suffice, as eventually the business will suffer if its business model remains the same.
More can be done for broadband
One of the mantras of the new government is fighting to lower fixed broadband prices so that the larger population can have access to faster Internet at lower prices.
For years, users have been subject to high pricing and issues of speed and quality.
Since June this year, the Communications and Multimedia Ministry helmed by Gobind Singh Deo, has disrupted a regime of what some call “cartel-like pricing” and comfortable Arpus (average revenue per user).
The shake-up is for everyone to have has access to the Internet as the world embraces digitalisation.
According to recent study by Google and Singapore’s Temasek Holdings, South-East Asia’s Internet economy, including e-commerce, online travel and online media will be worth US$240bil by 2025.
So, do Malaysians want to miss out on this big wave after having missed out on the data centre wave in the past?
One of the critical factors for fast fixed broadband prices to drop is to introduce the mandatory standard access pricing (MSAP), which essentially is wholesale access pricing.
The MSAP came out at the end of 2017, but could not be pushed through. It was implemented in June and that explains why packages have dropped to below RM100 a month, something impossible before May 9.
With the digital craze, it is impossible for one network to cater to the nation’s needs and that is why Tenaga Nasional Bhd has been roped in as an alternative fixed fibre network provider alongside Telekom Malaysia Bhd (TM).
Being the incumbent, the entry of other players into its turf will surely impact its earnings.
But this is only to be expected.
TM’s share price had already been falling since Jan 2 from RM6.17 a share to RM5 a day before the 14th general election. And it continues to fall due to several issues, including the resignations of two CEOs in less than six months, and uncertainties as to who would lead TM even though there is an able acting CEO now.
It has to optimise its network, sweat its assets further, increase productivity, be more responsive and agile, trim a lot of fat and flatten its structure. All this should have been addressed long ago.
However, TM can also do with a mandatory access pricing for mobile services agreement, and both Gobind and the regulator should take the 200-odd NFP to task to provide fast fixed broadband services because only with fierce competition can rates fall further.
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