Budget 2022: What’s In It For The Real Estate Sector and Property Buyers?
- By CompareHero.my
- November 27, 2020
The recent Budget 2021 proposes a number of initiatives for the real estate industry and home buyers. Read this article to find out the key highlights and benefits that home buyers can expect to receive from the latest national budget.
The Parliament has finally passed Budget 2021 at the policy level after 12 days of heated debate in the Dewan Rakyat. The bill will continue to be debated on the committee level on 30 November.
But even before new and improved measures were announced, Budget 2021 had already included an exhaustive list of goodies, many of which are much-needed catalysts to boost the country’s economy and help sustain the livelihood of many Malaysians.
With a record of RM322.5 billion expenditure, Budget 2021 is the largest budget in Malaysian history. In our previous take, we concluded that Budget 2021 is an inclusive bill that offers a little bit of something – if not a lot – for everyone: the Bottom 40, Middle 40 and Top 20, small and medium enterprises (SMEs) and multinational companies.
But does the budget offer a laundry list of benefits for the real estate sector and Malaysian home buyers? Well, it’s certainly a boon for first-time home buyers; with that said, let’s take a closer look at these property-focused initiatives for more insights.
Contents
- 1. Are you a first-time home buyer? We’ve got some good news for you!
- 2. Abandoned housing projects will get stamp duty extensions too
- 3. Rent-to-Own Scheme (RTO) for PR1MA homes
- 4. More housing options for the lower-income group
- The benefits and initiatives are not as exhaustive, but it’s a definite boon for first-time home seekers
1. Are you a first-time home buyer? We’ve got some good news for you!
Buying your first house is a daunting task. The amount of lengthy paperwork, research and money involved throughout the process can seriously take a toll on someone. To top it off – there’s something innately significant about buying your first house that contributes to this added pressure when compared to other investments in life. Don’t get us wrong, your first car or first mutual fund investment could be equally important but it doesn’t carry the same emotional connection as your first house.
But, no worries, in an effort to encourage homeownership, the Malaysian government recently announced a new benefit for first-time home buyers!
If your selected first home is below RM500,000, you are eligible for a full stamp duty exemption for memorandum of transfer documents (MOT) and loan agreements for purchase agreements starting from 1 January 2021 to 31 December 2025.
The government is already running the Home Ownership Campaign (HOC) until May 2021, which provides a similar stamp duty exemption but limited to new launch properties.
First introduced in 2019, the HOC initiative aims to support home seekers secure houses, as well as encourage the sales of unsold properties in Malaysia’s housing market. The HOC extension was announced during the short-term economic recovery plan, PENJANA in June after numerous industries, real estate particularly, took a heavy beating during the Movement Control Order (MCO) period.
For more context, the HOC was initially introduced to help aspiring homeowners get a leg up in the real estate game as well as to mitigate the ongoing glut of unsold properties or overhand properties in the Malaysian market – a long-standing issue in the country.
Here are more details of the HOC campaign:
- Stamp duty exemption on the instruments of transfer and loan agreement for the purchase of residential homes priced between RM300,000 to RM2.5 million (but subject to at least 10% discounts by the developer).
- The exemption on the instrument of transfer is limited to the first RM1 million of the home price, while full stamp duty exemption is given to loan agreements effective for Sales and Purchase Agreements signed between 1 June 2020 to 31 May 2021.
Related: #NewNormal: 7 Tips To Buy A House In Malaysia During COVID-19 Pandemic
Under Budget 2021, however, the government has also extended the stamp duty exemptions to the secondary market – unlike the HOC extension which was limited to new launch properties, and this gives home buyers the opportunity to explore the subsale market.
2. Abandoned housing projects will get stamp duty extensions too
Abandoned house projects are a real serious concern in our country. According to a report by the Sun Daily, a total of 281 private housing projects comprising 73,959 housing units and involving 48,810 buyers, were confirmed to have been abandoned in Peninsular Malaysia from 2009 to June 30, 2020. That figure doesn’t even include Sabah and Sarawak yet.
To mitigate this issue, the government is extending the stamp duty exemption on loan agreements and MOT for rescue contractors (essentially new contractors who take on abandoned projects) and original buyers of abandoned houses for another five years (January 2021-2025).
But this exemption is only applicable for abandoned housing projects certified by the Ministry of Housing and Local Government (KPKT).
This move aims to incentivise new developers to take on half-completed property projects and accelerate the completion of said projects. It’s an obvious win for property developers, many of whom are struggling to keep their heads above water, and have seen reductions in the average sales of their businesses. For consumers or home buyers, the plus is being guaranteed a financial incentive up to 2025.
Related: Budget 2021: What’s in it for SMEs, Startups, E-commerce
3. Rent-to-Own Scheme (RTO) for PR1MA homes
Though not much information has been disclosed about this initiative, the government will work closely with selected financial institutions to provide a Rent-to-Own Scheme (RTO) worth RM1 billion. Another initiative directed at first-time home buyers, it will run until 2022 and will involve 5,000 PR1MA houses.
It’s a relatively new concept in Malaysia, but the scheme was introduced in the country a few years ago to make owning a property more affordable for more Malaysians.
Through this scheme, Malaysians can own property by first renting it, with the option to end it with a sale, giving the home seeker the rare opportunity to try the house first before deciding whether to buy it. Of course, there are pros and cons to this as well.
This scheme also doesn’t require the initial payment of 10% downpayment associated with buying a house out. How this scheme works is that those interested in buying a property enter into a lease, a contract between the developer and the potential buyer, that dictates a certain length of time he or she will first rent the home for. The lease duration varies according to people, but some might rent it for five years, and others for longer, like 20 years. At the end of the contract, you can exercise the option to purchase the property, giving the scheme its name:rent-to-own.
4. More housing options for the lower-income group
It’s also very encouraging to see that the government recognises the need to allocate funds to spur homeownership among the lower-income group (B40).
Among these initiatives include:
A total of RM1.2 billion provision for the construction of comfortable and quality housing for low-income earners:
- RM500 million to build 14,000 housing units under the People’s Housing Project (PPR).
- RM315 million to construct 3,000 units of Rumah Mesra Rakyat built by Syarikat Perumahan Negara Bhd (SPNB).
- RM125 million for maintenance of low and medium-low cost strata-housing and also for upgrading and repairing old houses, including those damaged by natural disasters.
- RM310 million for Malaysia Civil Servants Housing Programme (PPAM).
The benefits and initiatives are not as exhaustive, but it’s a definite boon for first-time home seekers
We have to admit that we feel the initiatives in Budget 2021 are not as comprehensive for the housing market. The proposed benefits will help spur the growth of the real estate sector, but we still feel it falls a little short of being ‘all-encompassing’ like the actual budget.
Either way, it’s still encouraging to see that there are initiatives aimed at incentivising homeownership among Malaysians, especially first time home buyers in these difficult times as the country continues to battle the effects of the pandemic.
For our full take on the key highlights of Budget 2021, check out our article. For more information on Budget 2021, check out our series of articles under the #Budget2021 tag series.
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#BreakingItDown – 8 Things That Affect Your Car’s Resale Value
- By CompareHero.my
- November 26, 2020
There are different factors that influence your car’s resale value such as the mileage, model, year of production, car’s age and more. In this article, we listed down eight determining factors that may affect the resale value of your car. Read below to find out.
If you are trying to sell or trade-in your car, you’d want to squeeze as much money out of it as possible. But a little research may surprise you at how much or little your car’s market value actually is.
Cars are already notoriously known for being terrible investments because of depreciation, a measure of how quickly a car loses value, which is also the biggest cost of car ownership, accounting for more than a third of the average annual cost.
There are many websites that say your new car’s value declines as much as 10% the moment it drives off the lot, and that really isn’t an exaggeration. Though depreciation varies by car brands and models, as well as the geographical location, a car can depreciate by more than 20% after just one year, according to ezAuto, an automotive information and technology website and ecosystem.
You could be more accountable for the depreciation rate by knowing what factors influence it. (Image source: Zigwheels)
Your car will then continue to lose around 10% to 20% of its value each year for the first five years. By the end of the five-year period, your vehicle could be worth about only 40% of the price you originally paid for it! If you’re curious to find out how much your car is worth in today’s market, you can refer to this calculator by Takaful Malaysia.
We don’t deny that some cars have lower depreciation rates compared to others. According to iCarData platform, brands like Proton, Perodua, Honda, and Toyota, which covered approximately 81.9% or four out of five cars in Malaysia’s automotive market in 2019, have the best resale value in Malaysia.
According to the iCarData platform, these brands are able to retain a sustainable chunk of their original price tag because they offer superb value for money and are extremely reliable. In fact, they say, first-generation models of Toyota Vios or Perodua Myvi retain up to 30-40% of their original value even after 10 years of service.
Generally, Perodua and Honda have the lowest depreciation rates. (Image source: Carlist)
- Blue line: Perodua
- Grey line: Honda
- Yellow line: Toyota
- Orange line: Proton
The bottom line: depreciation is unavoidable, however, there are some things you can do to slow down the process. Conversely, there are certain factors that could accelerate the depreciation process and affect your car’s resale value.
In a country like Malaysia, where the used car market trades around 400,000 cars annually or about 66% of the new car sales in the country, according to the Malaysian Reserve, it is pertinent to understand what factors affect a car’s resale value. Let’s take a look:
Contents
1. The car make and model
The brand image of a car varies according to the region you live in, and may positively or negatively impact the resale price.
The power of branding is indisputable, and is the ultimate economic moat. Brand perception can easily be the main reason a car possesses inherently more value than others, and is a reason why a buyer chooses one car over the other, regardless of the condition and quality of the car. This factor may not be grounded in logic or facts, but is just a matter of perception and preference.
Other times, a brand that is considered more practical (i.e. efficient fuel consumption) would be more favorable. More prestigious brands that have a reputation for quality and reliability may be more trusted than lesser-known or unknown brands.
Like we summarised earlier, brands like Proton, Perodua, Honda, and Toyota are more commonly used in Malaysia, because they are perceived as more reliable by most Malaysians. We also found out that continental cars, however, are typically less well-received in the resale market in Malaysia, and have higher depreciation rates than Asian car brands. This could be because these brands may generally have more expensive parts that are difficult to source.
Related: #BreakingItDown – Here Are The 5 Things You Should Know Before Changing Cars
2. The car colour schemes
You risk not closing a deal if your car comes with eccentric colours, especially if the model becomes discontinued or would require additional money for the upkeep cost.
Though this factor is subjective, generally, a car with flashy, bright and striking colours like pink, orange, teal and bright purple is more difficult to sell compared to a car that comes in basic colours like black, white and gray.
Without a doubt, having your favourite colour for your car may be good for the eyes, but it could discourage people because of the additional cost it takes to maintain it. And generally, people tend to lean towards colours that are more commonly used in the market.
Thus, best to stick to the classic or basic colours to ensure that your car can be easily sold if you decide to do so one day.
3. Number of owners
This is pretty straightforward, but let’s admit it – even just at face value, a car with only one previous owner will be more attractive than a car that had multiple owners.
The concept is similar to owning other technological items like cameras, laptops and televisions; the longer it has been in use, the higher the wear and tear.
Similarly, a second-hand car’s resale value will always be lower than a brand new car. So don’t be surprised, if your used car’s resale value is extremely low.
Different drivers have their own driving styles, and some may be more aggressive than others, but either way, each leaves their own effect on the car, which over time, will result in some wear and tear.
If the car has been under multiple ownerships, it only makes sense that the car’s performance would have been adversely affected as well, and thus, decreasing its value.
Related: #BreakingItDown – Don’t Make These 9 Mistakes When Buying A Car
4. The car’s interior and exterior conditions
This is a no-brainer but any damages to a car’s exterior, however slight, will have a negative impact on the resale value. Buyers prefer a good-looking car for very obvious reasons: it shows that the car is well-maintained and well-kept by the previous owner.
Likewise, if a car’s interior has an unpleasant odour, it will be harder to sell. Therefore, we believe it doesn’t hurt, in fact recommended, to keep your interior well-kept and maintained. Get professional help to repair any dings and dents, do a paint job to give it a new look as well as detail the interior and clean where necessary. Enhancing the interior and exterior of your car can help bring its value up, and help accelerate your sale.
But beyond prepping your car for a good sale, taking care of your car’s exterior serves more than just a cosmetic purpose – repairing small occurrences like scratches will avoid long-term issues like rusting and damage to the car’s body that could eventually affect the car’s overall performance.
Potential buyers may also be turned off by a car that is visibly worn out because it means they need to fork out more money to repair or enhance the car.
5. The after-sale maintenance quality and service records
Prospective buyers will want to know if a car’s service centre has what it takes to take care of the vehicle. At the same time, they will likely want to see your service records as proof that your car has been well-maintained. Keeping all your service records in one place will come handy when you need to show it to the prospective buyer.
A well-maintained car has a higher resale value simply because it means the buyer is not required to spend more money on the repairs costs to cover wear and tear or rust.
Though most cars come with rust-proofing, this doesn’t completely protect it from wear and tear and could eventually wear off. Investing some money for rust repairs on your car will pay off when selling it off.
Besides that, it’s fairly obvious, but another easy way to maintain the resale value of your car is to make sure your car gets serviced regularly on time.
All cars come with their own dedicated maintenance schedule, which is usually every few months or after a car has hit certain kilometers. It’s also important to send your car to an authorised workshop for your particular make and model.
Overall, buyers will have more confidence in paying a higher price when they see that the car has been well taken care of.
6. The car’s mileage
This is a good indicator of a car’s wear and tear. A car with high mileage means it has been used through and through and is less attractive than a car with low mileage.
Conversely, a car with lower mileage typically translates to higher resale value.
All things considered, though your car may be in mint-condition, this doesn’t necessarily guarantee a good resale value if your car has racked up more than 420,000km for example.
In fact, many if not all, market value calculators require mileage input as one of the data measurements before a resale value or market value can be determined.
7. A car’s age
Generally, an older car is less valuable compared to a brand new car, with the exception of a vintage or classic car. The latter is able to hold onto its value longer, if not increase – sometimes making it a valuable investment.
And unfortunately, used cars, particularly those aged between nine and 12 years old, are harder to finance – they either come with a massively high interest rate or it may be difficult to secure loans with banks.
Good news is the car insurance premium could be lower for used cars! Car insurance premiums are calculated based on many factors, one of which is the market value of the vehicle. Thus, a cheaper car (by nature of being used) would translate to cheaper insurance.
By the way, if you are on the lookout for car insurance or would like to renew yours, apply through us now to stand a chance to win a Petronas gift card worth up to up to RM300.
Related: #WhatIWishIKnew – What Happens If You Don’t Pay Your Car Insurance Premium
8. Modifications on the car or aftermarket accessories
Having high-end stereos, custom rims or other complex accessories may be visibly appealing and fun – but it may also be costly to you in the future when you want to sell the car.
This factor is subjective, depending on the modification, but certain state-of-the-art enhancements may negatively impact the resale value because potential buyers may not want to be responsible for the lucrative upkeep costs.
Our take is to just steer clear of add-ons, because they may even be dangerous to your car if they alter powertrain or safety equipment.
Honorable mentions – economic outlook and market conditions, supply and demand and insurance coverage
These factors may or may not have the biggest impact on your car’s resale value, but they could influence it.
Economic outlook is important because selling your car during a recession may not give you the best value compared to when you sell it during favourable market conditions. You may be offered for less despite your car being tip-top or in the best state just because economic conditions are less than rosy.
Supply and demand matters because if there’s a glut of similar cars on sale, then yours won’t really stand out compared to the rest. Granted you could get more for a comparable car that is in less favourable condition, but supply and demand does affect the value of your car at that point in time.
Lastly, though it’s not immediately obvious, car insurance has a slight impact on your car’s resale value. In an effort to save extra bucks, people often choose to go with the cheaper insurance, but that may not be the best idea if it leaves your car vulnerable on the road. So investing a little extra on insurance will indirectly impact the resale value of your car later on.
The value of your car will depreciate regardless, so try to salvage as much of it by being mindful of the factors that influence it
Depreciation is similar to taxes – you can’t avoid it no matter what you do. But it’s worse in a sense that depreciation offers no value to you.
Understanding how depreciation works and what factors affect your resale value is crucial because it could help you save a couple thousands of Ringgit down the road – money that could be used for other investments or commitments. So we recommend you make the effort to understand ways to maintain or increase your car’s resale value.
We hope you found this article helpful!
Whether you are a first-time or seasoned buyer, the process of buying a car can be complicated if you don’t know the industry that well. The #BreakingItDown series is all about addressing this problem. Stay tuned for more content.
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Budget 2022: What’s In It For SMEs, Startups, E-Commerce?
- By CompareHero.my
- November 25, 2020
Budget 2021 brings hope to small and medium enterprises (SMEs), startups and businesses in Malaysia that are affected by the COVID-19 pandemic. Read this article to find out the key highlights and benefits that your business can expect to get from the latest national budget.
Many businesses, particularly small and medium-sized enterprises (SMEs) have been on the ropes since the COVID-19 outbreak.
According to Entrepreneur Development and Cooperatives Minister Wan Junaidi Tuanku Jaafar, who was citing statistics from the Companies Commission of Malaysia, more than 30,000 SMEs have closed shop since the movement control order (MCO) was implemented in March.
From that figure, about 9,675 SMEs ceased operations during the first phase of the MCO from 18 March to 9 June, and 22,794 during the recovery MCO (RMCO) phase from June to September.
The sluggish economic outlook is also evident by the fact that many individual borrowers and microenterprises have requested for repayment assistance. As of 9 October, more than half a million applications for repayment assistance have been received by Bank Negara Malaysia (BNM).
Banking institutions have also facilitated requests for repayment assistance of close to 480,000 individuals and 34,400 SMEs in COVID-19-affected sectors, according to Bank Negara’s latest Financial Stability Review report for the first half of 2020.
Beyond the dramatic loss of human life and unprecedented challenges to our public health systems, it’s clear that the pandemic has also severely tested the livelihood of many local businesses.
But the recently-announced Budget 2021 does offer several benefits that could aid the SMEs as well as boost the e-commerce and digital scenes in the country.
Related: Budget 2021: Here Are The Key Highlights And Takeaways For You
In this article, we take a closer look at the different initiatives and benefits that SMEs and e-commerce startups can tap on in order to sustain their business in these challenging economic times.
Contents
- 1. Enhanced targeted loan repayment assistance
- 2. Financial aid to support Bumiputeras, women and other entrepreneurs
- 3. Enhance access to financing aid
- 4. Targeted assistance and rehabilitation facility
- 5. Driving investments into the country to boost local businesses
- 6. Strengthening key sectors to aid entrepreneurs
- 7. Prioritising automation and digitalisation to boost startups
- 8. Exemption from Human Resources Development Fund (HRDF) levies
1. Enhanced targeted loan repayment assistance
Microenterprises, as defined by SME Corp, with loans of up to RM150,000 may get assistance through the enhanced Targeted Repayment Assistance (TRA) programme, and can request to either:
- Defer monthly instalments for three months; or
- Reduce monthly instalments by 50% for six months.
The assistance will be extended for loan facilities that were approved before 1 October 2020 which are not in arrears for more than 90 days at the time a borrower requests for repayment assistance.
The other good news is additional documentation from borrowers is not required by banks to obtain repayment assistance. However, for hire purchase loans and fixed rate Islamic financing, borrowers would need to sign new agreements in accordance with the Hire Purchase Act 1967 and Shariah requirements.
The repayment enhancement will be available for instalments due in December 2020 onwards, and will take effect at the next instalment following a borrower’s request and confirmation.
These additional repayment assistance will be available to eligible borrowers between 23 November 2020 and 30 June 2021.
Some financial institutions such as Bank Islam, Maybank and OCBC have recently announced that they are ready to receive applications for targeted loan repayment assistance.
If you wish to request for assistance you may contact your bank through its customer service hotlines, online banking, or by visiting your bank’s branch to confirm the repayment options.
2. Financial aid to support Bumiputeras, women and other entrepreneurs
The government has introduced different initiatives to aid entrepreneurs from all backgrounds,
To boost and empower Bumiputera entrepreneurs, a total of RM4.6 billion will be channelled for the following purposes:
- RM510 million to finance Bumiputera SMEs and micro SMEs through TEKUN Nasional and Perbadanan Usahawan Nasional Berhad (PUNB). TEKUN is a financial services agency for micro and small entrepreneurs under the Ministry of Agriculture & Agro-based Industry. PUNB was established to enhance the participation and involvement of Bumiputera in entrepreneurship in the country.
- RM800 million for capacity building programmes by Bank Pembangunan Malaysia and SME Bank.
- RM2 billion to assist the financing of Bumiputera SMEs through Syarikat Jaminan Pembiayaan Perniagaan (SJPP).
- RM1.3 billion for various capacity building programmes, including professional development, Dana Kemakmuran Bumiputera as well as programmes or projects specifically for Bumiputeras.
To empower women entrepreneurs, the government has allocated RM95 million for special micro credit that will be financed through TEKUN, Majlis Amanah Rakyat (MARA) and Agrobank. MARA is responsible for developing, encouraging, facilitating and fostering economic and social development, particularly in rural areas. Another RM50 million will also be offered to female entrepreneurs to support them via Ar-Rahnu BizNita, a programme parked under the Islamic Economic Development Foundation (YaPEIM).
Additionally, more than 2,000 women entrepreneurs can benefit from guidance courses via the Micro Entrepreneur Business Development programme (BizMe). This programme will focus on matters such as marketing strategies, packaging and labelling, and the technical guidance of businesses.
In addition, TEKUN will provide RM20 million specifically for the Skim Pembangunan Usahawan Masyarakat India (SPUMI) and RM5 million for entrepreneurship development of other minority communities.
3. Enhance access to financing aid
The fourth strategy under Budget 2021, the government has provided close to RM1.9 billion of soft loan funds and grants via PRIHATIN and PENJANA packages to help SMEs and micro-SME entrepreneurs facing difficulties accessing financing aid.
This initiative will be carried out through several other measures:
Measure 1: Micro Credit Financing
SME Bank will provide the Lestari Bumi financing facility scheme (funds amounting to RM300 million) to encourage Bumiputera micro and small businesses to transform to a higher category.
The government will also introduce Jana Niaga, a national supply chain finance platform to assist the financial position of SMEs that supply to the government or GLCs. It also aims to benefit SMEs who have cash flow problems due to the long invoice payment period as well as help them secure loans from financial institutions.
The Jana Niaga platform will be led by EXIM Bank with the involvement of several financial institutions, and will be implemented together with Petronas and Telekom Malaysia. Up to RM300 million will be provided by EXIM Bank to drive Jana Niaga.
Businesses can also leverage on peer-to-peer financing (P2P) under the supervision of the Securities Commission Malaysia (SC) as one of the alternatives to get financing. This financial innovation has generated financing, in excess of RM900 million, to aid SMEs, according to the government.
“To support P2P platforms, especially those based on invoice financing, RM50 million will be allocated based on a matching investments basis,” said Finance Minister Tengku Dato Sri Zafrul Aziz.
In addition, micro credit financing worth nearly RM1.2 billion will be provided through TEKUN, PUNB, Agrobank, BSN and other financial institutions, including RM110 million to the Micro Enterprises Facility under BNM to encourage entrepreneurship among gig workers and the self-employed as well as to support the iTEKAD programme.
Launched in May 2020, the iTEKAD programme combines micro and social financing to empower micro entrepreneurs from the B40 segment to generate sustainable income and contribute to society. The programme will be expanded to additional financial institutions and collaborate with more state religious authorities and delivery partners in 2021.
Lastly, the government will also allocate RM230 million through PUNB as financing for SMEs. Businesses can tap into this resource for working capital, upgrading of automation systems and equipment, and expenditure related to the implementation of COVID-19 SOP compliance.
Measure 2: Loan Guarantees
The government will provide an additional RM10 billion for government guarantee schemes via Syarikat Jaminan Pembiayaan Perniagaan (SJPP); RM2 billion will be reserved specifically for bumiputera entrepreneurs. This is on top of the RM25 billion that has already been allocated for this initiative thus far.
Lack of collateral affects SMEs’ access to funding from their financial institutions. SJPP allows SMEs to overcome this barrier by providing government guarantee schemes as an alternative solution to their collateral requirements. (Image source: Syarikat Jaminan Pembiayaan Perniagaan (SJPP))
Essentially, government guarantee schemes are alternative financing solutions for eligible SMEs to obtain credit facilities from participating banks, with the government acting as a guarantor. GGS-Prihatin, is one of the financing schemes introduced by the government and guaranteed by SJPP to provide relief assistance to SMEs adversely affected by the COVID-19 outbreak.
Other schemes include the PENJANA Tourism Financing (PTF), Special Relief Facility Scheme (SRF), SME Automation and Digitalisation Facility Scheme (ADF) and Agrofood Facility Scheme (AF). All are available from SJPP’s participating financial institutions. Applications are open until 31 December 2020, or until fully utilised, whichever is earlier. Check out their website if you need more information.
These schemes typically provide a guarantee coverage of up to 80%, but the facilities obtained can only be used for working capital or capital expenditure.
Measure 3: Alternative Financing
Lastly, to encourage take-up, the government is also offering an income tax exemption of 50% of the investment amount or limited to RM50,000 for individual investors to take part in Equity Crowdfunding (ECF), an alternative financing method, especially for technology start-ups.
The government is also allocating RM30 million through matching grants to be invested on ECF platforms under the supervision of the SC.
Related: Budget 2021: Analysing The Measures Through A Personal Finance Lense
4. Targeted assistance and rehabilitation facility
Targeted Assistance and Rehabilitation Facility, under Bank Negara Malaysia (BNM). It will be introduced via loans from banking institutions.
5. Driving investments into the country to boost local businesses
To help local companies face future challenges, the government will act as a facilitator in providing access to investment funds, including improving the business scene in the country.
One of the measures aimed at executing this goal includes encouraging the production and purchase of locally made products.
The following are some of the SME-focused initiatives:
- RM25 million for the Micro Franchise Development and Affordable Franchise programmes as well as Buy Made in Malaysia programme.
- RM50 million to be channeled into training programmes, sales assistance and digital equipment for 100,000 local entrepreneurs to encourage adoption of e-commerce under the e-Commerce SME and Micro SME Campaign.
- RM150 million to implement the Shop Malaysia Online initiative alongside e-commerce platforms to encourage online spending, which aims to benefit 500,000 local sellers including the halal products and handicrafts entrepreneurs.
- RM35 million to promote Malaysian-made products and services under the Trade and Investment Mission.
6. Strengthening key sectors to aid entrepreneurs
The agriculture sector is key to the country’s development. According to the government, it contributed 7.1% to the country’s GDP in 2019.
While other economic sectors contracted as a result of the COVID-19 pandemic, the agriculture sector is projected to grow at 4.7% of GDP next year, according to the government.
Therefore, to further boost this sector, the government is allocating RM1 million at a rate of 3.5% for a period of 10 years under the Agrofood Value Chain Modernization programme to aid agricultural entrepreneurs to procure equipment and technology based on IR4.0. Agrobank will provide RM60 million for this purpose.
The government is also helping micro entrepreneurs through the implementation of an Aquaculture Development programme with an allocation of RM10 million through matching grants of up to RM20,000 for micro entrepreneurs to buy equipment to develop high-value aquaculture livestock.
7. Prioritising automation and digitalisation to boost startups
The government will focus on long-term productivity through the use of new technology to accelerate the country’s transformation towards becoming a high-income economy.
The government has allocated RM1 billion, through Bank Pembangunan Malaysia Berhad (BPMB) to drive the Industrial Digitalization Transformation Scheme which aims to boost digitalization activities. The availability of these funds will be extended until 31 December 2023.
In addition, to support automation and modernisation, additional funds amounting to RM150 million will be provided under the SME Digitalization Grant Scheme and the Automation Grant. The eligibility for these grants has also been relaxed for micro SMEs and start-ups that have been operating for at least six months.
8. Exemption from Human Resources Development Fund (HRDF) levies
Companies that are still affected by the pandemic are exempted from paying the HRDF levies for six months, starting from 1 January 2021. This exemption also covers the tourism sector.
If you didn’t already know, the HRDF mandatory levy payment is collected by the HRDF from employers in certain industries, with the goal of providing employee training for the Malaysian workforce.
The rate of your company’s HRDF levy can either be 0.5% or 1% of the monthly wages of each employee, depending on the size of your company’s workforce.
If you are interested in more Budget 2021 content, then stay tuned as we tap into to other related analysis or insights as part of the #Budget2021 series.
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Here Are 7 Reasons Why The CIMB Platinum BusinessCard Should Be Your Company’s Go-To Credit Card
- By CompareHero.my
- November 24, 2020
Take your business to the next level with the new CIMB Platinum BusinessCard, and enjoy exclusive rewards like cash rebates. Even better, you don’t need a large business to be qualified for one.
When starting a business for the first time, you may choose to use a personal credit card, rather than a business credit card, for certain business expenses.
However, as your business starts to grow, you may want to consider opening a separate business credit card due to the tangible benefits — i.e, having a credit card in your business name that is used strictly for business purposes.
Plus, when used responsibly, a business credit card allows you to invest in resources that will help your business grow when you may not have cash on hand.
Undeniably, many personal credit cards in the market carry rewards and benefits that are just as great; but the CIMB Platinum BusinessCard has better business-centric rewards.
So if you’re going to be spending anyway – from procurement making purchases for the company, to having your workforce entertain your clients – why not consider the CIMB Platinum BusinessCard?
In this article, we listed seven reasons why a business credit card would be better suited to help you manage your cash flow and daily operations more efficiently.
Contents
1. Maintains a separation of business and personal expense
If you have a sole proprietorship, it’s important to treat your company as a separate entity from your personal financial situation, a key factor in maintaining the limitation of personal liability.
If you mix your personal expenses and business expenses, you could ultimately lose the very legal protection you hoped to gain by incorporating a limited liability company.
Also, for tax purposes, it is best practice to keep your business expenses separated. A business credit card by its very nature will keep business expenses separate.
2. Effective cash flow management
Business credit cards often come with higher lines of credit, which is how many small businesses get off the ground.
One example where a business credit card excels is in times of adversity when sales are low and the business is strapped for cash. If the business owner has a business credit card, he will be able to access funds to run the business and this can act as a temporary financial cushion for the business.
In short, business credit cards give you better spending power and help create more wiggle room in times of economic difficulties.
3. Establishes business credit history
Having a business credit card helps you establish a separate credit history for your business.
Small businesses often get turned down for loans or get disadvantageous loan terms because they lack a credit history for their business.
If you get a business credit card, you’ll likely have a business credit score with major credit bureaus. The upside is that if you use your card responsibly, you could improve your score and get lower interest rates in the event you need to take out a business loan.
In today’s economy, more people will take the leap and work for themselves – as evident by the fact that 78.5% of SMEs in Malaysia are micro-enterprises.There’s plenty of rewards and risks in being self-employed, but you can prepare for the latter with a business credit card. Whether you have temporary cash flow issues, want to earn rewards to offset some of your business spending or need to make a necessary business purchase, a business credit card can be a major benefit – if you use it wisely.
4. It offers major convenience
One card for all business expenses, including travel, entertainment, utilities, assessments, dining, insurance, and others. CIMB provides both a summary statement for the company as well as an individual card statement for the cardholder. This card provides cost reduction and convenience – no petty cash, manual claims and no manual bill reconciliation.
It makes the process of managing your expense budget easy, with less work on your part to see exactly where you are spending and how much. It also keeps records properly identified for tax purposes, making tax time much less of a headache.
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5. Allows you to delegate, yet control employee spending
As your business grows and adds employees, delegation becomes a critical skill. You want to provide your employees authority and not require them to come to you on minor decisions.
However, you will still require control over critical things such as your business’ finances, and that’s where the CIMB Platinum BusinessCard comes in – as a useful tool for delegation and individual card issuance.
6. Earn valuable rewards
The CIMB Platinum BusinessCard offers plenty of benefits. Apart from its irresistible dining and shopping privileges, and the perpetual waiving of its annual fee, it also provides unlimited 0.5% cash rebate on local spend and 1.25% cash rebate on overseas spend – arguably among the highest in the market today.
As a card owner, you will also enjoy a cash rebate of RM50 annually for 20 retail transactions performed within 12 months from your card issuance or anniversary date. Lastly, the card also comes with travel insurance coverage of up to RM1,000,000!
Exclusions apply, please refer to Terms and Conditions on the website for details.
7. Easier qualification for loans
Part of being a small business owner means constantly focusing on ways to increase the growth rate of your business. And any business person who has tried to apply for a loan from a bank without collateral can tell you how strenuous it can be especially when you do not have a well-established credit reputation.
In some cases, a business credit card comes bundled with a loan but the establishment of credit history does give your business some brownie points when applying for a business loan.
CIMB Platinum BusinessCard features
| Attractive cash rebates | Simplicity & convenience | Travel & dining privileges | Effective cashflow management & cost savings |
| 0.5% cash rebate on local spend | No sign up cost to customers | Save on dining, fuel, hotel and biz services | Up to 50 days of interest free credit |
| 1.25% cash rebate on overseas transactions | Rebate is on a cashback basis | 45k merchant locations worldwide | Annual fees waiver |
| RM50 cash rebate for 20 retails transactions within 12 months from card issuance | Over 4,000 offers/privileges on CIMB deals, covering dining, traveling and lifestyle |
Terms and Conditions
- Shopping vouchers are capped at first RM10,000 vouchers, limited to RM100 worth of shopping voucher per SME Banking customer.
- Nescafe Dolce Gusto Coffee Machines are capped at first 20 units per SME Banking customer.
- The Gift will be awarded on a first come first served basis subject to availability.
- All Gifts are neither transferable nor exchangeable.
Other Terms and Conditions apply.
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#BreakingItDown – Used Vs New Cars – Which One Should You Buy?
- By CompareHero.my
- November 23, 2020
Buying a car is one of the most expensive purchases you will ever make in your life. Before sealing the deal, you have to consider several factors, including whether you should buy a new or used car. In this article, we break down the pros and cons of each type to help you make the right decision. Read more to find out.
One of the biggest dilemmas that car buyers face is whether to purchase a new or used car. Doesn’t matter if it’s a downsize, upsize, update or their very first purchase, the dilemma is felt equally across the board. Is one ultimately and inherently better than the other? Or is it the case of different strokes for different folks?
The truth is there’s no right or wrong answer because it really goes down to what best suits your wants and needs, and either way you can’t go wrong.
But on the other hand, there are several clear distinct differences between used and new cars that could ultimately affect your bottom line. Some of these variations range from prices, financing, performance to reliability and insurance costs.
Similar to other big purchases, the objective is to walk away knowing you sealed the best possible investment, with as little cost as possible.
So let’s do a rundown on the pros and cons of buying new versus old cars.
Contents
The perks of buying a new car
The biggest advantage of buying a new car is what you’d expect – having more certainty over what you’re getting yourself into.
Since no one has ever used it before and it’s fresh out of the showroom, there’s no untold horror stories associated with a new car, and we’re pretty certain that the car wouldn’t experience many breakdowns over the course of its first one to three years. This is good news for your pocket, too, as it means money will likely be spent on maintaining the car than repairing it.
You can also rest assured knowing that your car is operating with the newest cutting-edge technology, meaning its parts are more fuel-efficient, which can only be better for the environment and your wallet. Who doesn’t like a car with better gas mileage and lower emissions?
You’ll receive the great benefit of having warranty (though some used car dealers have this too depending on who you deal with), and because it’s brand new, it won’t come with wonky smells and interior stains and, of course, no visible wear and tear. You can also hook up your phone and other devices to the car with more ease.
But aside from the cosmetic benefits, there is also the possibility that banks can offer to finance your car at a lower interest rate; a plus for you because this reduces the amount of interest you pay over the life of the loan and gives you a lower monthly payment.
Related: #BreakingItDown – Don’t Make These 9 Mistakes When Buying A Car
The downsides of buying a new car
The biggest issue with new cars is that you lose money on it as soon as you drive it off the lot.
From our research, of all the costs, depreciation – a measure of how quickly a car loses value – is the biggest cost of car ownership, accounting for more than a third of the average annual cost.
That reason alone is enough to convince you that depreciation is a big red flag. Imagine the boatloads of cash you could save! In fact, depreciation takes the biggest hit in the first two to three years, and you’ll feel it the most when you sell or trade in your car.
But of course this won’t matter that much if you were to buy a used car or keep your car for a longer duration, but for many people depreciation is a compelling enough reason to deter buying new.
From a money perspective, buying a new car doesn’t make that much sense unless you have money you do not mind losing.
The overall costing is generally higher for new cars. When you buy a new car, you are required to pay service and tax fees, two things that could have been avoided with a used car. It also comes with a higher upfront price tag and monthly payments. Of course financing can make the purchase more economical, but even then, it’s important to ensure that the monthly payments are feasible enough for you.
Similarly, the car insurance premium could also be higher with a new car. By the way, if you are on the lookout for car insurance or would like to renew yours, apply through us now to stand a chance to win a Petronas gift card worth up to RM300.
Lastly, because a new car means a brand new model, there is some unknown reliability for that model year since there is no previous record over its performance. You could avoid such problems with used cars because they are tried and tested.
Advantages of a used car
If depreciation was your biggest issue with new cars, then one of the most significant advantages of buying a used car is letting someone else take the depreciation hit. After all, less depreciation equals a better investment. You may also be able to sell it for nearly the same amount you paid!
We’ll be honest, buying a used car makes more sense for your wallet if finances is your main concern and priority. For one, you’ll get to avoid the unnecessary fees and taxes. For example if you’re buying privately, you can automatically skip out on the service fees. Overall, we found out that on average, used car prices are 50% lower than new cars.
Undeniably, the interest rates for new cars tend to be slightly lower than they are for used cars, just by virtue of its nature. But you can get favourable terms on your hire purchase loan by being a bit more savvy with your research and approach. First, you can choose to pay the loan back sooner – for instance, paying it back in two years instead of five years. If that’s not possible, then just enjoy the glory of paying lower monthly payments. The other option is to pay your used car back in cash.
Similar to financing, car insurance will also depend on the age of your car; but the good news is insurance for used cars tend to be cheaper! Car insurance premiums are calculated based on many factors, one of which is the market value of the vehicle. Thus, a cheaper car (by nature of being used) would translate to cheaper insurance.
Related: #WhatIWishIKnew – What Factors To Consider Before Buying Car Insurance? We Asked A Financial Expert
Disadvantages of used cars
It’s not made to order so you can’t be too picky. If you like having the option of picking your colour and the features etc., then a used car won’t have any of that for you. You get what you pay for as is. So if the car has a pretty crappy wiper, you’ll have to deal with that. Of course, some dealers, like Carsome, try to help you get the most out of your car-buying experience as dealers like them specialise in selling used cars.
Used cars are usually sold as “as is,” meaning they may or may not come with warranty – some do, many don’t. The problem with this is any issue that arises out of your purchase is your sole responsibility. For example, if your battery dies after one month, you have to buy a new one which can be costly.
Reliability is another big issue with used cars. Old technology not only means it’s less reliable and savvy, it could also mean that it’s less safe because the car is not up-to-date with the latest safety regulations. For context, as safety laws are reviewed and improved each year, car manufacturers are forced to comply by improving safety features, and older cars don’t come with these new improvements. Additionally, a used car – depending on how old it is – may not be fuel-efficient. This is not only bad for your wallet but for the environment as well.
When you purchase a used car, you may not be able to find reliable financing options – it may be super limited or is extremely expensive. Used cars also come with potentially high repair costs. It may not come with basic maintenance packages: for example, you can’t get your oil changed for free at certain checkpoints. Other than that, used cars could potentially experience more breakdowns than a new car.
Lastly, this may not be a big red flag for many but not knowing who the previous owner could be a problem for you. The previous owner could have been a responsible older man or a rowdy teenager who never got the oil changed. Depending on the dealer, it may or may not be possible to know who owned it before you. This matters because you want to make sure that you’re not inheriting a worn-out car and that it was in responsible and safe hands before you.
Related: #BreakingItDown – Here Are The 5 Things You Should Know Before Changing Cars
Should I buy a new or used car?
It depends on what you’re prioritising and what factor is the most important to you. If money isn’t a big concern, then focusing on the brand and features could be another priority. But if your money is the biggest issue you have, then it’s important to factor in all the different costs like insurance, financing, upfront cost, depreciation, maintenance etc.
It’s worth emphasising again that depreciation is a silent killer to your automotive budget – it doesn’t seem obvious but it cuts a large dent into your budget and forces you to lose money that you could have saved for something else.
We hope you found this article helpful!
Whether you are a first-time or seasoned buyer, the process of buying a car can be complicated if you don’t know the industry that well. The #BreakingItDown series is all about addressing this problem. Stay tuned for more content.
