It's been a while since I've written a blog post, mostly because I've been too busy with work, and partly because I simply haven't had any inspiration for writing. Recent events, however, has compelled me to write down my thoughts about an extremely important factor of all human lives -- identity.
We don't really stop to consider what our identity is or how it affects our lives; probably because it is such an integral and natural part of us as a human being that we often take it for granted. Consider, for a moment, what your identity is and how you hold on to it. We identify ourselves with nationality, race, religion, hair color, skin color, eye color, and even with interests and hobbies. We create labels for every aspect of our lives in order to identify ourselves and others.
"He's a gamer."
"Ohhh. He probably doesn't have a life."
Gamer. Hipster. Gangster. Nerd. Geek. These and a ton of other words are all labels that we've created and use to segregate people, whether they're friends, family, or acquaintances, and even ourselves. The ironic part is that the people who we don't even know -- those we have the least knowledge of and have the least amount of right to judge -- are the ones we label and segregate the most.
Why do we instinctively label things and desperately hold on to our identity? Perhaps because without it, we would all be lost. In most cases, people's biggest fear apart from death is the loss of identity. Not having an identity means not having anywhere to belong. It means not having companions, motivation, or purpose. If we identify ourselves with being Asian, for example, it gives us drive to promote various aspects unique to Asian culture. It gives us pride and a meaningful reason to continue in this otherwise dreary and tedious passing of time we call life.
"Got rice, bitch?"
Yes, identity is absolutely critical and essential to keep us sane.
Identity is also the source of most of our happiness and, more significantly, most of our troubles. Arguments, violence, and even wars are started over identity.
The recent bombings that occurred in France really hit a spot in my heart. It made me angry and sad, and it made me think about what we have done to ourselves as humans for the sake of identity.
This morning, I received a call from a friend. He's from China and has been living in Japan for over 20 years. His wife is Japanese, and he just recently had a baby. He called to tell me that he has decided to change his nationality from China to Japan. I'm not so shocked about his decision as I am about his reason. His wife felt that having a Chinese nationality would be disadvantageous to them as a family living in Japan. She felt that it would be harmful to their child's reputation, and could cause damage to his future.
If that's not discrimination, I don't know what is.
He's in a very similar situation as me. I lived in Japan for around 30 years. My wife is also Japanese, and my kid, like his, also has dual citizenship (for now); and yet, through all the years I've lived in Japan, I never came close to deciding on naturalization. I've considered it, but I never felt it was a real option for me.
I'm not sure why, actually. Was it because I felt strongly about being Malaysian? No. Not really. Was it because I had political or moral issues? No. Certainly not. Now that I think about it, I think it was probably because it simply felt strange to identify myself as Japanese. No matter how long I lived there, how much I was recognized by people around me as a Japanese, and no matter how much I became Japanese in my habits, I just didn't identify myself as a Japanese.
Sure, there are a lot of conveniences that would have came from naturalizing. I certainly haven't lived long enough in Malaysia to actually need or have use for my Malaysian citizenship, but it wasn't about all that. It was less about what it meant to be a particular nationality than it was about retaining my original identity and not changing it to something that I felt no instinctive connection to.
Would my life be better if I had chosen to naturalize myself as a Japanese? Possibly. Who knows? Would my family be happier if I had done it? Maybe, but I don't think about it.
My point is, our identities are crucial; so crucial that it can even cause wars and the destruction of families. Yet, this friend of mine has decided to give up his original (and in a sense, his true) identity because his wife's views on identity are, well, for the lack of a better expression, fucked up.
This brings me to Malaysia. We often say "embrace diversity" in Malaysia, but no one actually really considers what that means. It not only means holding on to and cherishing your identity, it also means to respect, treasure, and even learn to love other people's identities. Because everyone needs to hold on to their identity, if you don't respect other people's right to it, it means that you also have no right to hold onto yours.
Having an identity is truly essential, but when it gets overboard, things get out of hand quickly. I urge everyone -- especially my fellow Malaysians -- to moderate yourselves in the labeling of others. Excessive labeling is distasteful, disrespectful, and ultimately dangerous.
By all means, identify yourself to keep yourself happy. We all need to. But respect everyone else's need to do it as well.
Tuesday, November 17, 2015
Tuesday, September 16, 2014
10 Reasons Why I DON'T Want To Be Filthy Rich
1. Discounts and sales promotions will no longer be exciting.
2. I'd never have a dream car, since they would all be reality.
3. Completely ruins the fun of lotteries.
4. My daughter would be a spoiled piece of shit excuse of a human.
5. My wife would be a spoiled piece of shit excuse of a human.
6. Lony would be really fat.
7. Philanthropy would be my only salvation, and that's just so not me.
8. I'd never know if I have any real friends.
9. I'd have to pay absurd amounts of tax.
10. If I converted all my money into 10 sen coins, the weight would crush me to death.
2. I'd never have a dream car, since they would all be reality.
3. Completely ruins the fun of lotteries.
4. My daughter would be a spoiled piece of shit excuse of a human.
5. My wife would be a spoiled piece of shit excuse of a human.
6. Lony would be really fat.
7. Philanthropy would be my only salvation, and that's just so not me.
8. I'd never know if I have any real friends.
9. I'd have to pay absurd amounts of tax.
10. If I converted all my money into 10 sen coins, the weight would crush me to death.
Thursday, June 26, 2014
Watch, as I brutally dissect the act of falling in love.
We all want to be in love, don't we?
Well, tough. It ain't gonna happen. And if you're lucky enough for it to happen for you, it ain't gonna last.
Sure, sure. There are those rare and mysterious folks who claim that they're in love with their partners from dusk 'til dawn, and from acquaintance 'til death. Well, you're not one of them, and neither am I. Might as well face up to it.
The thing is, if you don't accept it, then you end up constantly yearning and searching for it. Of course, when you find it again, it'll just fade away again. Then you just aimlessly repeat the vicious cycle.
It is in our primal nature to love to be in love. After all, it's exciting, it's uplifting, it's refreshing, and it's...well, it fucking feels damn good, doesn't it? But you see, that's just the endorphins talking. When we're in love, our brains secrete endorphins that tell us we're happy -- fucking ecstatic! That's only natural right? After all, what's there not to like about being in love? But then again, what the fuck does your brain know about love?
There really isn't anything different from being addicted to love than being addicted to, say, heroine or morphine. In fact, endorphins and morphine are pretty much the same damn thing. So falling in love is like doing morphine shots. For free. Kinda. Come to think of it, it's not free at all. But we're certainly under the delusion that it's free. Maybe that's what makes it even more enjoyable.
Just as the effects of morphine don't last, neither do the effects of love. The question is, what do you do when you run out? You could keep finding new partners to fall in love with, but what kind of life is that gonna lead you to? If you want to get married or feel that marriage is one of the ultimate goals of your life, don't marry for love. At least, don't marry for the delusion of love.
I'm somewhat of a subject matter expert on marrying for love. I did it three times before, and each time it ended not so well. Currently, I'm married again; only this time, unlike my previous marriages, I have a kid. Am I still in love with my wife? Nope. Not really. Do I care for her? You bet your damn knickers I care for her. I'd give my life or left testicle for her -- not that I think she'd appreciate either. But the point here is really the kid. We're genetically built to care for our offspring, and that, my dear readers, is what truly makes the world go 'round.
The whole purpose of this human mechanism of falling in love is to get you to grow attached to someone and procreate. Because, you see, without this mechanism, the human race would be extinct. It's a biological force of nature that helps our race continue on. The endorphin part is just there to trick you into it.
Now that you know love is just a grand scheme by biological nature to prolong the existence of the human race -- which in itself is fairly meaningless to begin with -- let's move on to the subject of marriage, shall we?
Marriage is a legally binding contract created by people. Basically, this means that in the very large send of the universe, it doesn't really mean jack shit. "Legally" binding just means that there are certain consequences should you break the rules. It doesn't "physically" or "mentally" or "emotionally" prevent you from doing anything. So marriage is really just people's way of forcing you to commit to a relationship, because if you didn't, your kid would probably end up starving to death in a back alley dumpster somewhere.
Yes, it's still all about the kids.
So, no, marriage is not for you to ascertain your love with another person. It's not the beginning or the end or whatever people like to say about it. It's not about the wedding or the reception or the cake or the stupid wedding gifts that no one ever uses anyway. It's not about the people getting married at all. It's about committing yourself to prolonging the existence of the human race.
But, as sophisticated and self-centered as humans have become, if you were to tell people this truth about the law of nature and marriage, no one would get married. That's why nature tries to make it enjoyable by allowing endorphins to flow through your body when you're in love, making you think that marriage is what you really want.
Nature is cruel, though, isn't it? If it were going to do that, why not secrete endorphins constantly even after you're married? Noooooooooooo. Instead, once you commit yourself, it just gives you the finger and moves on. The only time you end up getting a rush that's even remotely similar, is when you're humping your partner, and that is why so many people end up marrying for the sole purpose of sex.
Now imagine that you've already decided that you don't want children. Heck, in the day and age, who can afford one? Besides, they're noisy, dirty, poop everywhere, make your life a nightmare, and then take all your money when they grow up, just so they can leave you in the dust when you're old and crippled.
Now also imagine that sex is the defining feature of your relationship with that hot girl you're going to propose to. Maybe you're a titty man. Maybe you're an ass man. Maybe you're a leg man. Or maybe you're just a bit of everything from eyebrows to toenails. Whatever your fetish with your hottie, it won't last. Isn't it obvious? Age gets the better of us all eventually. There's no escape from deterioration of physical looks and sex drive, just as there is no escape from love subsiding after marriage.
You've got the image of a stone cold hard core manly man who doesn't want kids and wants sex 3 times a day now? Ok, now imagine you get married to your super hot girl, and suddenly you find out there's a difference between you and your now-spouse in the desire for kids and frequency of sex.
Fuck! Where's my endorphins!? I didn't sign up for this shit!
Luckily for you, there's a way out. It's called divorce. Good luck with doing it without hurting anyone, though, including yourself.
So there you have it. My thoughts on love and the purpose it serves.
Tune in next time, when I give you all the juicy details on why men are making the rate of marriage globally drop.
Until then, keep searching for love, and keep lying to yourself. Adios.
Well, tough. It ain't gonna happen. And if you're lucky enough for it to happen for you, it ain't gonna last.
Sure, sure. There are those rare and mysterious folks who claim that they're in love with their partners from dusk 'til dawn, and from acquaintance 'til death. Well, you're not one of them, and neither am I. Might as well face up to it.
The thing is, if you don't accept it, then you end up constantly yearning and searching for it. Of course, when you find it again, it'll just fade away again. Then you just aimlessly repeat the vicious cycle.
It is in our primal nature to love to be in love. After all, it's exciting, it's uplifting, it's refreshing, and it's...well, it fucking feels damn good, doesn't it? But you see, that's just the endorphins talking. When we're in love, our brains secrete endorphins that tell us we're happy -- fucking ecstatic! That's only natural right? After all, what's there not to like about being in love? But then again, what the fuck does your brain know about love?
There really isn't anything different from being addicted to love than being addicted to, say, heroine or morphine. In fact, endorphins and morphine are pretty much the same damn thing. So falling in love is like doing morphine shots. For free. Kinda. Come to think of it, it's not free at all. But we're certainly under the delusion that it's free. Maybe that's what makes it even more enjoyable.
Just as the effects of morphine don't last, neither do the effects of love. The question is, what do you do when you run out? You could keep finding new partners to fall in love with, but what kind of life is that gonna lead you to? If you want to get married or feel that marriage is one of the ultimate goals of your life, don't marry for love. At least, don't marry for the delusion of love.
I'm somewhat of a subject matter expert on marrying for love. I did it three times before, and each time it ended not so well. Currently, I'm married again; only this time, unlike my previous marriages, I have a kid. Am I still in love with my wife? Nope. Not really. Do I care for her? You bet your damn knickers I care for her. I'd give my life or left testicle for her -- not that I think she'd appreciate either. But the point here is really the kid. We're genetically built to care for our offspring, and that, my dear readers, is what truly makes the world go 'round.
The whole purpose of this human mechanism of falling in love is to get you to grow attached to someone and procreate. Because, you see, without this mechanism, the human race would be extinct. It's a biological force of nature that helps our race continue on. The endorphin part is just there to trick you into it.
Now that you know love is just a grand scheme by biological nature to prolong the existence of the human race -- which in itself is fairly meaningless to begin with -- let's move on to the subject of marriage, shall we?
Marriage is a legally binding contract created by people. Basically, this means that in the very large send of the universe, it doesn't really mean jack shit. "Legally" binding just means that there are certain consequences should you break the rules. It doesn't "physically" or "mentally" or "emotionally" prevent you from doing anything. So marriage is really just people's way of forcing you to commit to a relationship, because if you didn't, your kid would probably end up starving to death in a back alley dumpster somewhere.
Yes, it's still all about the kids.
So, no, marriage is not for you to ascertain your love with another person. It's not the beginning or the end or whatever people like to say about it. It's not about the wedding or the reception or the cake or the stupid wedding gifts that no one ever uses anyway. It's not about the people getting married at all. It's about committing yourself to prolonging the existence of the human race.
But, as sophisticated and self-centered as humans have become, if you were to tell people this truth about the law of nature and marriage, no one would get married. That's why nature tries to make it enjoyable by allowing endorphins to flow through your body when you're in love, making you think that marriage is what you really want.
Nature is cruel, though, isn't it? If it were going to do that, why not secrete endorphins constantly even after you're married? Noooooooooooo. Instead, once you commit yourself, it just gives you the finger and moves on. The only time you end up getting a rush that's even remotely similar, is when you're humping your partner, and that is why so many people end up marrying for the sole purpose of sex.
Now imagine that you've already decided that you don't want children. Heck, in the day and age, who can afford one? Besides, they're noisy, dirty, poop everywhere, make your life a nightmare, and then take all your money when they grow up, just so they can leave you in the dust when you're old and crippled.
Now also imagine that sex is the defining feature of your relationship with that hot girl you're going to propose to. Maybe you're a titty man. Maybe you're an ass man. Maybe you're a leg man. Or maybe you're just a bit of everything from eyebrows to toenails. Whatever your fetish with your hottie, it won't last. Isn't it obvious? Age gets the better of us all eventually. There's no escape from deterioration of physical looks and sex drive, just as there is no escape from love subsiding after marriage.
You've got the image of a stone cold hard core manly man who doesn't want kids and wants sex 3 times a day now? Ok, now imagine you get married to your super hot girl, and suddenly you find out there's a difference between you and your now-spouse in the desire for kids and frequency of sex.
Fuck! Where's my endorphins!? I didn't sign up for this shit!
Luckily for you, there's a way out. It's called divorce. Good luck with doing it without hurting anyone, though, including yourself.
So there you have it. My thoughts on love and the purpose it serves.
Tune in next time, when I give you all the juicy details on why men are making the rate of marriage globally drop.
Until then, keep searching for love, and keep lying to yourself. Adios.
Sunday, February 23, 2014
I bought my iPhone 5S from Maxis for RM3,500.
I received an offer from Maxis a few months ago to purchase an iPhone 5S for about RM1,500. It seemed like a great deal at the time, but little did I know that I was being set up for a scam that I can only praise to be as ingenious.
I had sign up for a 2 year postpaid plan with Maxis in July 2012 when I purchased my Samsung Galaxy S3. When I went to inquire about switching to an iPhone 5S at the Maxis center in The Gardens Mall Mid Valley, the staff there informed me that I would need to switch to an "iValue" plan. It seems that with Maxis, iPhones must use its own unique postpaid plan. Although the monthly minimum payment was higher than what I was already committed to, I deemed it to be worth what I was getting, and so proceeded with the change.
The staff at the Gardens Mall Maxis center processed my change in postpaid plan diligently, albeit with horrible attitude as expected from Maxis, and I received my brand new iPhone 5S within 40 minutes. I then proceeded to the "iPhone activation counter" as instructed, and watched another staff take my iPhone out of its package and "activate" it in a slew of touches and slides that I probably could've done faster myself.
Anyway, I was satisfied. Knowing how horrible service is in Malaysia and Maxis in general, I was happy to be out of there with a new phone at a significantly discounted price.
All was fine until I received my Maxis bill the following month.
RM2,169.80
I had already paid for the phone on the spot, mind you, which means this absurd amount is inexplicable.
I continued to read through the invoice and saw 2 lines on it that rendered me speechless.
"RM1,000 - Early termination fee: Voice Plan.
RM1,000 - Early termination fee: Data Plan."
It seemed that I was being penalized because I had terminated my previous 2 year contract by switching to the iValue plan for my new iPhone.
Here are a couple of problems I see.
I had sign up for a 2 year postpaid plan with Maxis in July 2012 when I purchased my Samsung Galaxy S3. When I went to inquire about switching to an iPhone 5S at the Maxis center in The Gardens Mall Mid Valley, the staff there informed me that I would need to switch to an "iValue" plan. It seems that with Maxis, iPhones must use its own unique postpaid plan. Although the monthly minimum payment was higher than what I was already committed to, I deemed it to be worth what I was getting, and so proceeded with the change.
The staff at the Gardens Mall Maxis center processed my change in postpaid plan diligently, albeit with horrible attitude as expected from Maxis, and I received my brand new iPhone 5S within 40 minutes. I then proceeded to the "iPhone activation counter" as instructed, and watched another staff take my iPhone out of its package and "activate" it in a slew of touches and slides that I probably could've done faster myself.
Anyway, I was satisfied. Knowing how horrible service is in Malaysia and Maxis in general, I was happy to be out of there with a new phone at a significantly discounted price.
All was fine until I received my Maxis bill the following month.
RM2,169.80
I had already paid for the phone on the spot, mind you, which means this absurd amount is inexplicable.
I continued to read through the invoice and saw 2 lines on it that rendered me speechless.
"RM1,000 - Early termination fee: Voice Plan.
RM1,000 - Early termination fee: Data Plan."
It seemed that I was being penalized because I had terminated my previous 2 year contract by switching to the iValue plan for my new iPhone.
Here are a couple of problems I see.
- Is it truly the business ideology of Maxis to penalize loyal customers who continue to use their service by purchasing a new phone from them, change to a more expensive postpaid plan, and bind themselves for yet another 2 years??
- No one at the Maxis center in The Gardens Mall Mid Valley felt compelled to utter a single word of warning of advice to me that I would be penalized RM2,000 big ones for giving them more business.
Let's think about this. Had I known that I was going to be charged 2,000 bucks to buy a new iPhone, what are the chances I would've gone through with it? I mean, who in their fucking right mind would go for a discounted phone purchase just so they can pay more than double the next month?!
Maxis just appointed a new CEO a few months back who is attempting to bring the company back to reality -- to stop it from its snobbish path of immersing in its own recent success.
IT'S NOT WORKING.
I'd like to take this opportunity to remind Maxis that customer loyalty is what wins long term business, not how much market share you had in the last couple of years. If Maxis is in the telecommunications business for short term profit, it will crash and burn in the depths of customer dissatisfaction hell.
Yes, it's true that all the telcos in Malaysia are pretty lame when it comes to customer service and satisfaction, but you know what? Maxis is the largest (for now), and from what I see, they're trying the least.
It's the "we're on top so we don't have to work hard anymore" concept that we see so much in this country.
Here's a shocking business ideology for Maxis (and every other Malaysian company out there).
It's when you're on top that you need to work your hardest to stay on top.
But then again, why would Maxis give a shit about what I have to say? After all, I'm just one customer out of its HUGE clientele.
For this one puny customer, though, Maxis is no longer a business. For this one insignificant user who used to put forth all of his loyalty to them, Maxis is now just a large organization who sucks up money however they can with no consideration for how content their customers are.
Monday, December 16, 2013
What is DIBS and how does it work?
It has been common practice lately for property developers in Malaysia to offer DIBS as part of their sales package in order to incentify prospective buyers to purchase new developments still under construction. What is DIBS, though? I couldn't really find any decent sources of information on this, so I decided to write my own understanding in hopes that it might benefit others considering to purchase new property.
DISCLAIMER: Before I continue, please note and understand that I am NOT an expert on property or bank loans or anything related. I am just a simple family guy who did a lot of research and asked a lot of questions to those who know what they're talking about (hopefully).
What is DIBS?
DIBS stands for "Developer Interest Bearing Scheme". It is a sales tool for making the purchasing of a new development still under construction more attractive to prospective buyers. It is a loan scheme that is especially attractive to "flippers", or short-term investors, who want to make a quick profit by selling off property they purchase while the development is still under construction immediately after construction is complete.
How does DIBS work?
When you purchase property, you often have to make an immediate down payment of at least 10% of the overall selling price. After that, you get a loan from a bank for the remaining 90% (or however much you didn't pay). Usually, the installments for the loan will start immediately after your loan has been approved, even though the construction of the development hasn't been completed. This seems a bit unfair, since you're paying a loan for a property that you can't sell, rent, or live in yet. Plus, this is Malaysia. Who knows when the damn thing will be finished?
In comes the DIBS scheme. DIBS is essentially an agreement between the buyer, developer, and bank providing the loan that until the construction of the development is complete (and, in most cases, the keys are handed over), the bank won't charge you anything, and instead, charge the developer interest.
Now, this sounds pretty wonderful, but once you understand the details, things aren't so pretty anymore.
When you pay your installments for a loan, you are paying a portion of your principal plus the interest calculated based on the interest rate at which the loan was granted to you. If during the DIBS period, the bank was charging the developer the actual interest of your installments, it would be a steal for you. Everyone would love DIBS and even wish that the construction would last forever. The truth is, though, the interest that the bank charges the developer is based on the down payment that was made.
Here's where it gets worse. Not only is the developer not actually paying off the interest on your actual loan, they're not paying off any of your principal. Since interest is calculated based on how much principal you have remaining with the bank, you still end up paying all of the interest for your loan, which means you're not benefiting from DIBS in any way. In fact, because the DIBS delays when you start paying back on the principal and shortens your loan tenure, you end up paying MORE in interest.
So why do people like/want DIBS?
As I stated in the beginning, DIBS is good for those who want to "flip" the property for a quick profit. If I purchase a property with DIBS, all I pay during the construction period is the 10% down payment. If I sold my property as soon as construction is completed, as long as I sell it for more than what the original price was I bought it for, I make a profit, since I can just take the money I sold it for and settle my bank loan entirely without paying any interest at all, since my installments haven't started yet thanks to DIBS.
If the developer gave rebates or discounts on the property, I profit even more! If say the developer provided a 10% rebate, that means I didn't have to pay anything for down payment since the rebate offsets it, and I don't pay anything on the loan because of DIBS. So this means it's actually possible for me to own and sell property without spending a single cent, given that my timing is right.
What are the risks of DIBS?
Plenty. First, in order for DIBS to work, you must first secure a bank loan. If you do not qualify for the loan or the bank rejects your loan application for whatever reasons, DIBS doesn't work. Since you must commit to a loan in order for DIBS to work, you are responsible for the loan regardless of what happens to the property you purchase. If you are unable to sell it, you will have to pay the installments yourself (with higher interest, remember).
There is also quite a bit of speculation that in order for developers to be able to provide the DIBS scheme, they price the property at a higher price than the market rate. This means you're committing to a loan for an amount that you assume can be covered through appreciation (or inflation or both) during the time of construction. You also assume that there are willing buyers for the property at a price for you to make profit at the perfect timing so that you can settle the loan before the first installment. If the property doesn't appreciate, you lose. If you don't find willing buyers at the right timing, you lose.
Then there's always project abandonment. If the development is abandoned before completion due to a lack of funding or whatever other reasons, you are still stuck with the loan. In many cases, since loans are given out in disbursements, you won't be stuck with the entire loan amount, but for the disbursements already given out to the developer, you are still responsible for payment, regardless of whether the property was delivered to you as promised or not!! Remember that there are 3 parties involved here, and paying money back to the bank is between you and the bank while whether you get what you bought is between you and the developer. You can take legal actions against the developer to get reimbursed, but what you committed to the bank and what the bank has already given out is still your responsibility, NOT the developer's.
Let's recap with an example.
Say that a developer, Dodgy Properties Berhad, has started a new development project, and the first phase of sales has already begun. You decide to buy a 1,000 square foot condo for RM500k and think you can flip it for a 20% profit.
You pay 10% (RM50k) as down payment (perhaps rebated by the developer later), and you borrow RM450k from the bank at 4.5% interest using DIBS. The project is not expected to be complete for another 2 years, which means you don't have to pay anything on your loan for the next 24 months.
The developer pays the bank the interest on the down payment you paid for the next 24 months, but you haven't actually paid back a single cent to the bank on your loan because no payment is being made on the principal, and you still owe the bank RM450k (plus the interest calculated based on it).
You start to look for prospective buyers for this property you bought, hoping to find someone willing to pay RM600k for it as well as accept a handover time of 2 years from now. This way, you make an easy (if you consider this as easy) RM100k in profit.
A few things can happen from here.
The Ideal Scenario
You find a buyer who is fine with your terms, you sell the property for RM600k before your loan installments begin, and you settle your loan of RM450k without paying any interest. If the 10% was rebated by the developer, you made RM150k!
The Better Than Nothing Scenario
You're only able to find a buyer who is willing to pay RM500k for the property, you settle your loan before installments begin, and you make RM50k if the initial 10% was rebated. If it wasn't, you gain and lose nothing for the price of going through some hassle.
Or, you're only able to find a buyer who is willing to buy the property for RM600k a year after your loan installments have started. You immediately settle the loan, but you've already paid a year of principal and interest, taking about RM30k off the profit you make (on top of the pain it caused you to have to pay RM3k every month until you found a buyer).
The Fail Scenario
Property value plummets during the DIBS period and no one wants to buy your property. Even if you sold it, you'd actually lose money, so you're forced to either give up and take your losses while they're small, or move in yourself and pay the remainder of the loan (25 or 30 years or whatever) with higher interest.
The Completely Screwed Scenario
Dodgy Properties Berhad goes bankrupt and cannot finish the construction even though they've been funded by the sales of all the units. RM100k has already been disbursed to the developer by the bank, so you end up having to pay the bank back RM100k plus the interest for it, and have nothing to show for it. It's like you just threw money into the trash.
I hope this gives you a better idea of what DIBS is all about and that it provides you with some insight for when you're property hunting.
And again, please remember I am NOT an expert on the subject matter and it is entirely possible that not everything I wrote is accurate.
HAPPY INVESTING!!
DISCLAIMER: Before I continue, please note and understand that I am NOT an expert on property or bank loans or anything related. I am just a simple family guy who did a lot of research and asked a lot of questions to those who know what they're talking about (hopefully).
What is DIBS?
DIBS stands for "Developer Interest Bearing Scheme". It is a sales tool for making the purchasing of a new development still under construction more attractive to prospective buyers. It is a loan scheme that is especially attractive to "flippers", or short-term investors, who want to make a quick profit by selling off property they purchase while the development is still under construction immediately after construction is complete.
How does DIBS work?
When you purchase property, you often have to make an immediate down payment of at least 10% of the overall selling price. After that, you get a loan from a bank for the remaining 90% (or however much you didn't pay). Usually, the installments for the loan will start immediately after your loan has been approved, even though the construction of the development hasn't been completed. This seems a bit unfair, since you're paying a loan for a property that you can't sell, rent, or live in yet. Plus, this is Malaysia. Who knows when the damn thing will be finished?
In comes the DIBS scheme. DIBS is essentially an agreement between the buyer, developer, and bank providing the loan that until the construction of the development is complete (and, in most cases, the keys are handed over), the bank won't charge you anything, and instead, charge the developer interest.
Now, this sounds pretty wonderful, but once you understand the details, things aren't so pretty anymore.
When you pay your installments for a loan, you are paying a portion of your principal plus the interest calculated based on the interest rate at which the loan was granted to you. If during the DIBS period, the bank was charging the developer the actual interest of your installments, it would be a steal for you. Everyone would love DIBS and even wish that the construction would last forever. The truth is, though, the interest that the bank charges the developer is based on the down payment that was made.
Here's where it gets worse. Not only is the developer not actually paying off the interest on your actual loan, they're not paying off any of your principal. Since interest is calculated based on how much principal you have remaining with the bank, you still end up paying all of the interest for your loan, which means you're not benefiting from DIBS in any way. In fact, because the DIBS delays when you start paying back on the principal and shortens your loan tenure, you end up paying MORE in interest.
So why do people like/want DIBS?
As I stated in the beginning, DIBS is good for those who want to "flip" the property for a quick profit. If I purchase a property with DIBS, all I pay during the construction period is the 10% down payment. If I sold my property as soon as construction is completed, as long as I sell it for more than what the original price was I bought it for, I make a profit, since I can just take the money I sold it for and settle my bank loan entirely without paying any interest at all, since my installments haven't started yet thanks to DIBS.
If the developer gave rebates or discounts on the property, I profit even more! If say the developer provided a 10% rebate, that means I didn't have to pay anything for down payment since the rebate offsets it, and I don't pay anything on the loan because of DIBS. So this means it's actually possible for me to own and sell property without spending a single cent, given that my timing is right.
What are the risks of DIBS?
Plenty. First, in order for DIBS to work, you must first secure a bank loan. If you do not qualify for the loan or the bank rejects your loan application for whatever reasons, DIBS doesn't work. Since you must commit to a loan in order for DIBS to work, you are responsible for the loan regardless of what happens to the property you purchase. If you are unable to sell it, you will have to pay the installments yourself (with higher interest, remember).
There is also quite a bit of speculation that in order for developers to be able to provide the DIBS scheme, they price the property at a higher price than the market rate. This means you're committing to a loan for an amount that you assume can be covered through appreciation (or inflation or both) during the time of construction. You also assume that there are willing buyers for the property at a price for you to make profit at the perfect timing so that you can settle the loan before the first installment. If the property doesn't appreciate, you lose. If you don't find willing buyers at the right timing, you lose.
Then there's always project abandonment. If the development is abandoned before completion due to a lack of funding or whatever other reasons, you are still stuck with the loan. In many cases, since loans are given out in disbursements, you won't be stuck with the entire loan amount, but for the disbursements already given out to the developer, you are still responsible for payment, regardless of whether the property was delivered to you as promised or not!! Remember that there are 3 parties involved here, and paying money back to the bank is between you and the bank while whether you get what you bought is between you and the developer. You can take legal actions against the developer to get reimbursed, but what you committed to the bank and what the bank has already given out is still your responsibility, NOT the developer's.
Let's recap with an example.
Say that a developer, Dodgy Properties Berhad, has started a new development project, and the first phase of sales has already begun. You decide to buy a 1,000 square foot condo for RM500k and think you can flip it for a 20% profit.
You pay 10% (RM50k) as down payment (perhaps rebated by the developer later), and you borrow RM450k from the bank at 4.5% interest using DIBS. The project is not expected to be complete for another 2 years, which means you don't have to pay anything on your loan for the next 24 months.
The developer pays the bank the interest on the down payment you paid for the next 24 months, but you haven't actually paid back a single cent to the bank on your loan because no payment is being made on the principal, and you still owe the bank RM450k (plus the interest calculated based on it).
You start to look for prospective buyers for this property you bought, hoping to find someone willing to pay RM600k for it as well as accept a handover time of 2 years from now. This way, you make an easy (if you consider this as easy) RM100k in profit.
A few things can happen from here.
The Ideal Scenario
You find a buyer who is fine with your terms, you sell the property for RM600k before your loan installments begin, and you settle your loan of RM450k without paying any interest. If the 10% was rebated by the developer, you made RM150k!
The Better Than Nothing Scenario
You're only able to find a buyer who is willing to pay RM500k for the property, you settle your loan before installments begin, and you make RM50k if the initial 10% was rebated. If it wasn't, you gain and lose nothing for the price of going through some hassle.
Or, you're only able to find a buyer who is willing to buy the property for RM600k a year after your loan installments have started. You immediately settle the loan, but you've already paid a year of principal and interest, taking about RM30k off the profit you make (on top of the pain it caused you to have to pay RM3k every month until you found a buyer).
The Fail Scenario
Property value plummets during the DIBS period and no one wants to buy your property. Even if you sold it, you'd actually lose money, so you're forced to either give up and take your losses while they're small, or move in yourself and pay the remainder of the loan (25 or 30 years or whatever) with higher interest.
The Completely Screwed Scenario
Dodgy Properties Berhad goes bankrupt and cannot finish the construction even though they've been funded by the sales of all the units. RM100k has already been disbursed to the developer by the bank, so you end up having to pay the bank back RM100k plus the interest for it, and have nothing to show for it. It's like you just threw money into the trash.
I hope this gives you a better idea of what DIBS is all about and that it provides you with some insight for when you're property hunting.
And again, please remember I am NOT an expert on the subject matter and it is entirely possible that not everything I wrote is accurate.
HAPPY INVESTING!!
Wednesday, December 11, 2013
The Metropolitan Conspiracy
So here's my suspicion on what's going to happen with the capital area of Malaysia.
NO PLAN TO PLANNED
Kuala Lumpur was a city built with no planning. It was also developed during a time when technology, experience, and skills were all lacking. On top of that, the city was built according to the population and necessities from several decades ago, randomly adding on necessary infrastructure and developments as the population grew. This makes it an extremely badly designed city. That's why we get all these horrible traffic jams and inexplicable road structures. I mean, if they could do it all over according to today's population and needs with today's technology, there wouldn't be any roundabouts or 6 billion (slightly exaggerated) flyovers.
Everyone's moving to Klang Valley, and yet, because it's too late to try to restructure the entire area, the only feasible option is to move the population to less densely populated areas. If you can't provide the infrastructure for the population, bring the population to where you can, kan?
The government, as well as all the Dato and Tan Sri power players, have all sunk billions into building Putrajaya and Cyberjaya. Although it's taken much longer than it should have, it's finally about time to really promote, market, and sell these areas. For one, the major areas of Klang Valley are really running out of decent space, especially with the reserved areas for greenery. Second, prices are running so high that it's just simply not viable for younger generations to live in the current residential areas any longer. I mean, if instead of spending money that you don't have on rebuilding or renovating, you could sell your Dad's 30 year old house and land to buy brand new property in a clean, safe, and new environment, why wouldn't you?
To move a large enough population to the less dense areas, though, would take a lot of effort and money, as well as an extremely large-scale, well planned, and well funded project that revolves around moving the city center entirely. That's what the Metropolitan Conspiracy is all about.
BECOMING AN ADVANCED CITY
Think about all the major cities in the world and what they've been through. Cities like New York, Chicago, Tokyo, Paris, and London have all started small but eventually grew larger due to growing population and the demand for better housing, infrastructure, and transportation. The city center starts off getting more expensive, forcing newer arrivals to move to the outskirts. Then the outskirts become more expensive, moving even newer arrivals to the suburbs. Then suddenly, you've got this massive metropolitan area in which commuting 90 minutes one way is the norm.
That's definitely where KL is heading.
THE METROPOLITAN CONSPIRACY
If we consider the trend in which the different areas are developing in Klang Valley, we can see that the viable areas furthest out from KLCC would be Rawang to the north and Seremban to the south. If we were to accept an average commute time of 60 to 90 minutes one way and assume KLCC to be the center, it would make Rawang easily within the metropolis, but not Seremban; yet, it's hard to imagine developments reaching any further north than Rawang.
But wait... What if we move the center from KLCC to Putrajaya? Well, I'll be damned. There's your metropolis of the future.
Imagine a metropolis that covers Rawang from the north to Seremban to the south with Putrajaya as the center. Klang to the west and Semenyih to the east. It all makes sense! No wonder prices have been rising drastically in Cyberjaya and even a good jump in average property cost can be seen in Kota Kemuning, Semenyih, and even Nilai!
Sure, nobody's gonna give a shit for the next few years, but this is a 10 year, 20 year, 30 year master plan, and the keen investors and future readers have already caught on! People still talk about whether Cyberjaya will grow and become a feasible investment. If you're thinking that, you're not one of the keen investors or future readers. Besides, where else are you gonna go? Mont Kiara? Desa ParkCity? Yeah, only if you made a couple million a year, maybe!
By the time you're too old to get a 30 year loan (which is 35 for most banks, fyi), all the dust has settled from the construction rush, Mont Kiara, Desa ParkCity, and all those great exclusive townships will be traffic death traps that'll take you just as long to commute to PJ as it does from Cyberjaya. AND it'll cost you twice as much to invest.
Honestly speaking, it's already too late to invest in areas like Cyberjaya and Kota Kemuning at the time of this blog post, because property there already costs more than what Mont Kiara cost just 3 years ago. But at least now you have some insight to the trend, and hopefully, it'll be enough to guide you through this shitty mess we live in.
DISCALIMER: I am NOT an expert on property, investing, or economics. I'm just a normal family guy who did tons of research and footwork to find out as much information as possible about real estate in Klang Valley and then came up with his own theory. DO NOT base your investments purely on my opinions. I won't take any responsibility for your investment losses. I'll take some donations if you make money, though.
NO PLAN TO PLANNED
Kuala Lumpur was a city built with no planning. It was also developed during a time when technology, experience, and skills were all lacking. On top of that, the city was built according to the population and necessities from several decades ago, randomly adding on necessary infrastructure and developments as the population grew. This makes it an extremely badly designed city. That's why we get all these horrible traffic jams and inexplicable road structures. I mean, if they could do it all over according to today's population and needs with today's technology, there wouldn't be any roundabouts or 6 billion (slightly exaggerated) flyovers.
Everyone's moving to Klang Valley, and yet, because it's too late to try to restructure the entire area, the only feasible option is to move the population to less densely populated areas. If you can't provide the infrastructure for the population, bring the population to where you can, kan?
The government, as well as all the Dato and Tan Sri power players, have all sunk billions into building Putrajaya and Cyberjaya. Although it's taken much longer than it should have, it's finally about time to really promote, market, and sell these areas. For one, the major areas of Klang Valley are really running out of decent space, especially with the reserved areas for greenery. Second, prices are running so high that it's just simply not viable for younger generations to live in the current residential areas any longer. I mean, if instead of spending money that you don't have on rebuilding or renovating, you could sell your Dad's 30 year old house and land to buy brand new property in a clean, safe, and new environment, why wouldn't you?
To move a large enough population to the less dense areas, though, would take a lot of effort and money, as well as an extremely large-scale, well planned, and well funded project that revolves around moving the city center entirely. That's what the Metropolitan Conspiracy is all about.
BECOMING AN ADVANCED CITY
Think about all the major cities in the world and what they've been through. Cities like New York, Chicago, Tokyo, Paris, and London have all started small but eventually grew larger due to growing population and the demand for better housing, infrastructure, and transportation. The city center starts off getting more expensive, forcing newer arrivals to move to the outskirts. Then the outskirts become more expensive, moving even newer arrivals to the suburbs. Then suddenly, you've got this massive metropolitan area in which commuting 90 minutes one way is the norm.
That's definitely where KL is heading.
THE METROPOLITAN CONSPIRACY
If we consider the trend in which the different areas are developing in Klang Valley, we can see that the viable areas furthest out from KLCC would be Rawang to the north and Seremban to the south. If we were to accept an average commute time of 60 to 90 minutes one way and assume KLCC to be the center, it would make Rawang easily within the metropolis, but not Seremban; yet, it's hard to imagine developments reaching any further north than Rawang.
But wait... What if we move the center from KLCC to Putrajaya? Well, I'll be damned. There's your metropolis of the future.
Imagine a metropolis that covers Rawang from the north to Seremban to the south with Putrajaya as the center. Klang to the west and Semenyih to the east. It all makes sense! No wonder prices have been rising drastically in Cyberjaya and even a good jump in average property cost can be seen in Kota Kemuning, Semenyih, and even Nilai!
Sure, nobody's gonna give a shit for the next few years, but this is a 10 year, 20 year, 30 year master plan, and the keen investors and future readers have already caught on! People still talk about whether Cyberjaya will grow and become a feasible investment. If you're thinking that, you're not one of the keen investors or future readers. Besides, where else are you gonna go? Mont Kiara? Desa ParkCity? Yeah, only if you made a couple million a year, maybe!
By the time you're too old to get a 30 year loan (which is 35 for most banks, fyi), all the dust has settled from the construction rush, Mont Kiara, Desa ParkCity, and all those great exclusive townships will be traffic death traps that'll take you just as long to commute to PJ as it does from Cyberjaya. AND it'll cost you twice as much to invest.
Honestly speaking, it's already too late to invest in areas like Cyberjaya and Kota Kemuning at the time of this blog post, because property there already costs more than what Mont Kiara cost just 3 years ago. But at least now you have some insight to the trend, and hopefully, it'll be enough to guide you through this shitty mess we live in.
DISCALIMER: I am NOT an expert on property, investing, or economics. I'm just a normal family guy who did tons of research and footwork to find out as much information as possible about real estate in Klang Valley and then came up with his own theory. DO NOT base your investments purely on my opinions. I won't take any responsibility for your investment losses. I'll take some donations if you make money, though.
Monday, December 9, 2013
The Property Death Spiral of Malaysia
Looking to buy property? Wonder if you should buy a condo or a house? Want to learn about the different specs of property such as built-up sizes and GFA?
Well, you've come to the right blog post, because I'm going to explain it all to you. Actually, I'm not. Because, you see, it's all too complicated, and even if you learned all of it, it wouldn't really do you any good. Not in Malaysia, at least.
The real estate scene in Malaysia is currently in an absurd state which I like to call the "property death spiral". Property, including condos, terraced houses, and detached houses, are all at an unreasonably high price within the KL and Selangor area. How do I define unreasonable? Unaffordable by the average Malaysian, that's how.
We all know that prices have been going up while income has not increased, and the government is starting to impose taxes and reduce subsidies. The question then, is if the economy is bad and the government has no money, why is property unaffordable? Shouldn't the prices be dropping if no one can afford them?
Well, let's consider who are the people buying property, especially new developments, in Klang Valley. First, the very small percentage of extremely rich and well connected people. These guys are buying up more property than you could shake a stick at. In fact, collectively, they probably own a quarter of all the new developments that we as common folks can only ejaculate at.
Then there are foreign investors, who buy up most of the remaining 3 quarters. Why would they buy property in Malaysia? To make money, of course! You think a million ringgit is expensive for a house? Let's take a look at how much houses cost in Shanghai, Taiwan, or Hong Kong nowadays.
Taiwan: Condo, 2131 square feet, 3 bedrooms, 2 baths, 13 million RM.
Shanghai: Condo, 1421 square feet, 2 bedrooms, 2 baths, 15 million RM.
Hong Kong: Condo, 2158 square feet, 3 bedrooms, 2 baths, 40 million RM (that's roughly RM20k per square foot!!).
These aren't even luxurious places I'm talking about. They're just average apartments.
So you see, Malaysia is still cheap to the folks living in these areas, and since Malaysia is not yet a fully developed country, there is still chance that prices will rise, and hence, to them, it's still a viable investment.
So we have these rich locals and foreign investors pushing the prices up on our property. And that's what the government wants. You see, it's more important for the government to gather foreign investments than it is for them to ensure the citizens have adequate opportunities to buy houses, because it makes them much more money that way.
Once these rich folks who only buy property for investment and not live in have bought the property, they then look for opportunities to sell them to...you guessed it! To other rich locals and foreign investors. Obviously they want to make money, so they sell it for more than they bought it to others who want to invest and are willing to wait longer than they are. So the prices keep going up, and keep exchanging hands between the same people.
Yes. The Property Death Spiral.
5 years ago, a 3000 square feet built-up terraced house in Puchong cost around RM350k. Just 5 years from then, the same thing now costs a million RM. That's roughly TRIPLE the cost. Have our income gone up TRIPLE in the last 5 years. If yours has, please let me know.
Without focusing on foreign investments, though, the government is unable to generate enough revenue for the country to grow at an ideal pace. So basically, we're being sacrificed in return for money.
Does that even make sense? The growth of the country should be for its people. If to facilitate that growth means making daily living worse for the people, is there even meaning to the growth? To put it in another way, why do we want to grow as a country at all if it doesn't mean better living for the people?
If the government uses all the profit generated from these investments to create benefits for the people, it would make sense. Instead, though, they build useless palaces and envision public transportation that's poorly designed, poorly executed, and is never going to make it in time to help the majority of the people.
I think that there is another master plan. In fact, it's inevitable that they'd have to have an alternate plan to "fix" things, because there is no way that KL will be able to prosper the way things are going.
Stay tuned to my next blog post when I talk about what I think the future plan for Malaysia's capital is going to be. Until then, take care and be kind to others.
Well, you've come to the right blog post, because I'm going to explain it all to you. Actually, I'm not. Because, you see, it's all too complicated, and even if you learned all of it, it wouldn't really do you any good. Not in Malaysia, at least.
The real estate scene in Malaysia is currently in an absurd state which I like to call the "property death spiral". Property, including condos, terraced houses, and detached houses, are all at an unreasonably high price within the KL and Selangor area. How do I define unreasonable? Unaffordable by the average Malaysian, that's how.
We all know that prices have been going up while income has not increased, and the government is starting to impose taxes and reduce subsidies. The question then, is if the economy is bad and the government has no money, why is property unaffordable? Shouldn't the prices be dropping if no one can afford them?
Well, let's consider who are the people buying property, especially new developments, in Klang Valley. First, the very small percentage of extremely rich and well connected people. These guys are buying up more property than you could shake a stick at. In fact, collectively, they probably own a quarter of all the new developments that we as common folks can only ejaculate at.
Then there are foreign investors, who buy up most of the remaining 3 quarters. Why would they buy property in Malaysia? To make money, of course! You think a million ringgit is expensive for a house? Let's take a look at how much houses cost in Shanghai, Taiwan, or Hong Kong nowadays.
Taiwan: Condo, 2131 square feet, 3 bedrooms, 2 baths, 13 million RM.
Shanghai: Condo, 1421 square feet, 2 bedrooms, 2 baths, 15 million RM.
Hong Kong: Condo, 2158 square feet, 3 bedrooms, 2 baths, 40 million RM (that's roughly RM20k per square foot!!).
These aren't even luxurious places I'm talking about. They're just average apartments.
So you see, Malaysia is still cheap to the folks living in these areas, and since Malaysia is not yet a fully developed country, there is still chance that prices will rise, and hence, to them, it's still a viable investment.
So we have these rich locals and foreign investors pushing the prices up on our property. And that's what the government wants. You see, it's more important for the government to gather foreign investments than it is for them to ensure the citizens have adequate opportunities to buy houses, because it makes them much more money that way.
Once these rich folks who only buy property for investment and not live in have bought the property, they then look for opportunities to sell them to...you guessed it! To other rich locals and foreign investors. Obviously they want to make money, so they sell it for more than they bought it to others who want to invest and are willing to wait longer than they are. So the prices keep going up, and keep exchanging hands between the same people.
Yes. The Property Death Spiral.
5 years ago, a 3000 square feet built-up terraced house in Puchong cost around RM350k. Just 5 years from then, the same thing now costs a million RM. That's roughly TRIPLE the cost. Have our income gone up TRIPLE in the last 5 years. If yours has, please let me know.
Without focusing on foreign investments, though, the government is unable to generate enough revenue for the country to grow at an ideal pace. So basically, we're being sacrificed in return for money.
Does that even make sense? The growth of the country should be for its people. If to facilitate that growth means making daily living worse for the people, is there even meaning to the growth? To put it in another way, why do we want to grow as a country at all if it doesn't mean better living for the people?
If the government uses all the profit generated from these investments to create benefits for the people, it would make sense. Instead, though, they build useless palaces and envision public transportation that's poorly designed, poorly executed, and is never going to make it in time to help the majority of the people.
I think that there is another master plan. In fact, it's inevitable that they'd have to have an alternate plan to "fix" things, because there is no way that KL will be able to prosper the way things are going.
Stay tuned to my next blog post when I talk about what I think the future plan for Malaysia's capital is going to be. Until then, take care and be kind to others.
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