Q3/2013 ADVOCATE - · PDF filethe business Q3/2013 ... may be reproduced in any form without...

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Interview with the CEO of CIDB

Motivators and Conditions for Innovation

The Malaysian Property Dilemma

Sustainability and Building Better Cities

KDN NO. PP 5124/06/2012 (029800) / VOL.13 Malaysian International Chamber of Commerce and Industry (16841-V)

the business Q3/2013

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PROPERTY &CONSTRUCTION

Origin SJA

At Lend Lease, our clients and investors can choose to leverage our strengths at any stage of the property spectrum - from Development, Investment Management, Construction to Asset & Property Management, or partner with us through the complete journey.

Employing over 18,000 employees globally, our clients benet from Lend Lease’s unique stance of having a wealth of global knowledge and experience. Some of our global landmark projects include 313@somerset in Singapore, Darling Quarter in Australia, and Bluewater and Greenwich Peninsula in UK.

Having operated in Malaysia for more than 30 years, we are able to combine our local expertise as well as intimate knowledge of the market with our global experience. The iconic Petronas Twin Towers, Platinum Park and Setia City Mall are some examples of projects we have done in Malaysia.

We work with communities, clients and our partners to create the best places that we all live, work and play in. We recognise that our projects have a lasting impact on everyone and the environment around us. Our philosophy and approach is designed to deliver the most sustainable outcomes safely.

TO CREATE THE BEST PLACESOur multiple stakeholders perspectives create the best outcomes across the entire property value chain

DevelopmentInvestment

Management ConstructionAsset & Property

Management

Level 11, Tower 1Etiqa Twins11 Jalan Pinang50450 Kuala Lumpur, MalaysiaT + 603 2163 4511 | F + 603 2161 5421www.lendlease.com

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past two years, the anticipated price correction has reduced the market's demand for many properties and the trend continues thus far into 2013. The shift in Bank Negara's

lending guidelines have further

contributed to the drop in property purchases, as banks are now

obliged to calculate a

borrower's eligibility on

net and not gross income.

Nonetheless, high-cost properties—which are above RM500,000—continue to sell well. The increase in the real property gains tax and the introduction of a 70 percent loan to value ratio have not been a hindrance to the sale of these expensive properties. An interesting but not unexpected development is the fact that property transactions have been brisk in areas near the new MRT developments undertaken by the government recently, suggesting that investors are keen to take advantage of the potential rise in the value of surrounding properties that

With regard to property prices, there has been a shift in the launch prices of new properties of late; although they are still high, they have moderated from the higher rates as seen in 2011 and 2012 respectively. After the growth spurt that drove property prices skyward over the

Lookingbackatthefirsthalf(H1)of2013,wesawMalaysiaprepareitselfforamuch-anticipatedGeneralElectioninMay,wherethepublicatlarge—andtheeconomy—waitedwithanticipationfortheoutcome.Inconjunctionwithaslewofmegaprojectsinitiatedrecently,boththepropertyandconstructionindustrieshavealsohadtocontendwiththeuncertaintythatprecedessuchelectionswhich,inturn,affectedpeople'sspendinghabits.

President'sMessage

President's Message

construction industry towards the GDP is expected to be lower than last year's.

Another key development in this sector is the shortage in workers to supply current needs as the aggressive growth of this industry in recent years has spread human resources thin. To exacerbate matters, labourers are fast approaching the age of 50 and the Government has been urged to replenish and train new workers to support the projects that are in progress or those that will soon commence.

Lastly, word is rife that a Specialised Construction Court (SCC) will be instituted soon to hear construction-related cases as a response to the industry's need for such dispute resolution avenues. The SCC was first mooted in the Construction Industry Master Plan in 2007 to raise the construction industry to international standards. Given that the industry has specific and often technical considerations in resolving disputes, these specialised courts—presided by specialist judges—will augment the integrity and efficiency of the industry.

On the downside, many–particularly newcomers to Malaysia question the ongoing building of new developments, when adjacent properties particularly apartment blocks remain largely unoccupied.

Growing traffic congestion as new office and residential blocks spring up in already heavily congested areas indicates urban planning has still some way to go; while recurring public concerns over hillside developments points to a need for greater transparency and pre-consultation in the general awarding of new approvals to build. Quality of building work –reflected in collapsing flyovers and leaking roofs, is a recurring story in the Press, and inevitably leads back to the manner in which contracts are awarded in the first instance. The Property and Construction industry remains a critical area for general economic development and progress in Malaysia, and one which the local and international Business Community will therefore fully support as the new government moves towards greater

Business Advocate

transparency and international best practice in this respect.

SimonWhitelawPresidentMICCI

usually accompany infrastructure developments.

Following from the last point, the forecasted growth of construction industry has been above 10 percent despite having been revised throughout the first quarter of 2013. Such optimism stems from the fact that there are several billion-ringgit projects that have either begun and will soon begin as part of the Government's Economic Transformation Programme, through which various developments across the country have been initiated. Three highways in Selangor, the West Coast Expressway, and various MRT extensions are but some of these megaprojects that boost the construction industry in the immediate future, but the overall contribution of the

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the world, the ICC/WCF Congress allows us to learn the best practices and new formulations that Chambers worldwide are bringing to their Members. World business is changing and the needs and services that are of value to businesses, be they MNCs or SMEs are

Chamber ChatterContents

worldwide whose Customs recognise the ATA Carnet.

Following the WATAC meeting a special one day conference took place under the World Trade Agenda, promoted by ICC and supported by WTO.

The World Trade Agenda is a global project to engage business to provide a practical approach to reaching agreements in the WTO. In particular efforts are underway to secure some agreements at the WTO Ministerial in Bali later this year and deliver some positive results from the stalled Doha Round of multi-lateral

trade negotiations.

Finally, our trip to Doha was to attend the bi-annual ICC/

World Chambers Federation

congress. This international event

saw a record delegate

ChamberChatter

First there was the World ATA Carnet Council meeting which MICCI participated in as the National Guaranteeing Organisation for Malaysia. For those of you not too familiar with ATA Carnet, this is the international customs and export-import document used to clear customs without paying duties and import taxes on merchandise that will be re-exported within 12 months, such as exhibition goods, trade samples and professional equipment. With a new Chair for WATAC elected by the conference this year (Cindy Duncan, Senior Vice President of Carnet and Trade Services at the United States Council for International Business - USCIB) efforts are underway to increase the number of countries

participation of more than 2,000 delegates from over 140 countries. This congress is important to MICCI as a Chamber with a strong international focus.

In addition to discussing the latest economic situations from around

MICCI and ICC

.PUBLISHER Sandeep Juneja Holdings Sdn Bhd, Suite C-07-09, Plaza Mont’ Kiara, No.2 Jln Kiara, Mont’ Kiara, 50480 Kuala Lumpur, Malaysia.T: +603 6201 9766 F: +603 6201 9767

W: www.sandeepjuneja.com .CREATIVE Sandeep Juneja Agency .EDITORIAL stewart j forbes, sandeep juneja, jude liew, rishab kumar .PRINTER Percetakan Skyline Sdn Bhd (135134-v) No 35 & 37 Jalan 12/32B, TSI Business Industrial Park, Batu 6 1/2 Off Jalan Kepong, 51200 Kuala Lumpur. T: +603 6257 4846 / 1217 F: +603 6257 7525 / 1216 W: www.skylineprintpress.com

It aims to promote, protect and advance free enterprise and in particular the interests of the international investment community. Being the oldest private sector business organisation in Malaysia, it maintains a constant evaluation of the business climate and enjoys an excellent dialogue status with the government .DISCLAIMER All opinions and views expressed in this publication do not necessarily reflect the views of MICCI. The publisher shall not be held liable for any error or inaccuracy. No parts of this publication may be reproduced in any form without the publisher’s permission.

.MICCI is an organisation representing the majority of international corporations currently in Malaysia.

CONTACT Malaysian International Chamber of Commerce and Industry (MICCI)

C-8-8, Block C, Plaza Mon’t Kiara 2 Jalan Kiara, Mon’t Kiara50480 Kuala Lumpur

T: +603 6201 7708 F: +603 6201 7705

PRESIDENT'S MessageSimon Whitelaw

CHAMBER ChatterStewart J.Forbes

COVER StoryInterview with the CEO of CIDB

MICCI FeaturesMotivators and Conditions for Innovation

The Malaysian Property Dilemma

Managing Employees in the Construction Sector

Sustainability and Building Better Cities

Green Building Index: Changing the Future

Luxury vs Wellness: Are Luxury Properties Any Better? Setting Standards and Criteria

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07

08

12-3112

17

14

22

25

28

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CEO ProfileInterview with the Executive Chairman of CBRE Malaysia

MEMBERS News

MICCI News

Regional FocusIskandar Malaysia: Beginning to Shape Up

The Changing Skyline of Johor Bahru

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34-37

40-45

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StewartJ.ForbesExecutiveDirectorMICCI

AprilwasabusymonthforuswiththreeconsecutiveconferencestakingplaceinDoha,QatarundertheauspicesoftheWATAC,WTO,ICCandWCF.

changing also. MICCI is committed to delivering the very best value it can so that Members can maximise their business performance in these uncertain economic times.

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Dato’SriProf.Ir.Dr.JudinAbdulKarimistheChiefExecutiveoftheConstructionIndustryDevelopmentBoardMalaysia(CIDB)sinceAugust2011.Inthisposition,DatoSriJudinisentrustedtoleadthedevelopmentoftheMalaysianconstructionindustrytowardsglobalcompetitiveness.

Right Honorable Tun Arrifin, and as at 1 April 2013, two construction courts have been established – one in Kuala Lumpur and one in Shah Alam. I believe this will transform the construction industry to be more professional.

As for future plans, we look forward to host two major events in September, Rail Asia 2013 and EcoBuild 2013. Rail Asia is a conference that brings together the main players in the rail industry across the region to deliberate about relevant issues in the industry and share the latest technology and methodology in

the construction of rail. Ecobuild 2013, on the other hand, is an international conference and exhibition which has been organised

annually in London and now brought to Malaysia, because of our strategic location within Asia. It is one of the most important event for the construction industry, where all industry players will get together to discuss topics on sustainability

and the built

1Tell us a little about what CIDB has been doing

since the start of 2013, and what are some of the exciting things CIDB is undertaking later in the year.

We started 2013 by aligning our objectives and goals through the Balanced Score Card system. To ensure our efficiency and effectiveness, as well as our sustainability, it is critical for us to make decisions regarding our roles, functions, Key Performance Indicators and initiatives using the four perspectives of Financial, Customer, Internal Process, and lastly Learning and Growth. So, we definitely look forward to an exciting and fruitful year.

In March this year we

hosted the International Construction week which received encouraging participation from local and international industry players. Apart from this, I am also happy to share that our proposal to establish a Construction Court, has been accepted by the Chief Justice, the

environment while showcasing the latest products, technology and innovation in these areas.

2 Looking back over the past year, how has

the construction industry fared?

The construction sector performed very well in 2012. In fact, with a growth rate of 18.5 per cent, it far surpassed the national GDP growth or growth rate from any other industry in Malaysia. The last time the construction sector experienced a double digit growth rate was way back in 1997 before the Asian financial crisis. If you look at the industry trends, the construction industry today is very much private sector driven as compared to ten years ago. To illustrate, out of the RM120 billion construction projects in 2012, for example, 85 per cent was contributed by the private sector.

This year, we are off to a good start, as the first

Business Advocate

InterviewwiththeCEOofCIDB

Cover Story

quarter growth shows that the industry is still experiencing a double digit growth of 14.7 per cent, compared to the national GDP growth of 4.1 percent.

3 We hear that there has been a

labour shortage at construction sites. Can you tell us more about this problem, as well as what has been done to remedy the situation?

There are two things happening simultaneously that’s causing the problem. First, our country’s

construction sector is booming and many construction projects are being executed at the same time. While this is a good sign for growth, it puts a strain on resources – which includes labour, materials and even money. Secondly, as we prosper, our neighbouring countries like Indonesia, Myanmar and Vietnam, for example, are also prospering. This means there are more job opportunities on their own shores and not many of their citizens will go abroad to look for work. As such, the supply of cheap, unskilled labour from these countries

are not as readily available as before.

To solve this issue for the long term, we encourage the industry to use Industrialized Building Systems (IBS) as a method of construction. The IBS entails that building components be prefabricated in a factory and transported to the project site to be assembled. Not only does this method reduces dependency on unskilled labour, it is more environmentally friendly because it considerably reduces construction site wastes allowing for cleaner and safer sites.

We are also encouraging construction companies to use modern machineries that gets the job done faster and more efficiently compared to unskilled labour. CIDB is now working with MIDA (Malaysia Investment Development Authority) to push for a reduction in duty imposed on importation of heavy machinery. A reduction in tax will encourage more industry players to use machinery and reduce their dependency on unskilled labour.As we work towards reducing the need

MICCIspeakswithDato’SriProf.Ir.Dr.JudinAbdulKarimonthedevelopmentsintheMalaysianconstructionscene.

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for unskilled labour, we are also building local capacity in high skilled construction work. There are vast opportunities out there for our youths in the areas of machinery operations, wiring, scaffolding and welding among others. We provide training of these trades in our six training academies, Akademi Binaan Malaysia (ABM).

4 What are some of the other pressing

issues in the Malaysian construction industry that CIDB has detected of late?

Safety and health at construction sites is a big issue that we must deal with together as an industry. I encourage the construction industry players to emulate the Oil and Gas industry in their strict adherence to safety and health policy and procedures. A safe and healthy environment will make construction jobs more desirable to local skilled workers. CIDB has come up with the Safety and Health Assessment System in Construction or SHASSIC, a method to assess and evaluate the safety and health performance of a contractor. The MRT Corp, for example, requires all of their contractors to be

assessed using SHASSIC, to ensure adherence to the highest Safety and Health standards.

Next is the issue of quality. We must push for a quality in construction and reward construction industry players who delivers quality end products for their clients. CIDB has introduced QLASSIC – The Quality Assesment System in Construction, which is a system or method to measure and evaluate the quality of workmanship of a construction work based on the relevant approved standards. QLASSIC enables the quality of workmanship between construction projects to be objectively compared using a scoring system. To ensure quality delivery of the end product, developers or clients can choose contractors who have a track record of high QLASSIC scores.

5 Tell us about how the construction

industry has been modernising and using technology to better workflow, processes, and information sharing?

We are encouraging construction industry players to use BIM, or Building Information

Modelling, whereby a complete digital representation of a structure or building is created to represent the physical elements and functions of a facility. From the BIM model, consultants, contractors and other decision makers will be able to make accurate decisions during the construction, maintenance and demolition stages.

6 What are some skills development

initiatives that CIDB has been involved with lately in this industry?

CIDB has been working closely with many government agencies and industry players to ensure that trainees in our construction academy, ABM, obtain industry exposure during their training period and ensured a place once they have completed their training. Among our strong collaborators are Felda, Iskandar Region Development Authority (IRDA), Northern Corridor Implementation Authority (NCIA), Pemandu, The Welding Institute (TWI) and many others. We are also working closely with PTPK (Perbadanan Tabung Pembangunan Kemahiran) to offer 17 high impact and high skills training

under the PTPK loan. Many people do not realise that the skilled workforce in construction may earn a much better salary than graduates.

We want parents to understand that academic achievement is not the only pathway to success for their children. For those who are more technically inclined, a career in construction will definitely be a great option.

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we need to understand the main motivators

of inventors such as scientists, engineers, researchers and similar creativity enthusiasts to keep them inventing, innovating and creating.

Basic Motivator #1 Passion to solve existing problems

This group of people is observant on the problems of their daily life and will keep on thinking of ways to create

solutions to these problems. These

solutions will directly and

MotivatorsandConditionsforInnovation

by Bryan Wong

Thewheel,airplaneandlightbulbareamongsomeofthemajorinventionsofalltime.Thewheelbroughttotheexistenceofautomobiles,bicyclesandconveyorbeltsandthusweenjoylandmobility.Theairplaneledtothesubsequentexistenceofhelicopters,glidersandjetplanes,whichgaveustheconvenienceofairmobility.Thelightbulbgavebirthtotheexistenceofthef luorescentlight,vehicleheadlamps,spotlightsandLEDsprovidinguseverlastinglightsource.Intheconstructionindustry,severalhighachievementsofinventorsinthepasthaveledtomanyfurthergreaterconstructions.ThosehighachievementsincludetheironarchStLouisBridgespanningtheMississippiRiverin1867,theWashingtonCanalin1810andmanyothers.

Business Advocate Features

Basic Motivator #2Recognition

Besides being able to solve problems, some inventors will need to be recognised in some ways. There are many ways to obtain recognition. One of them is to participate in innovation competitions, exhibitions, publications and others. In Malaysia, the Malaysia Construction Industry Excellence Award (MCIEA) by the Construction Industry Development Board Malaysia (CIDB) has a special award for innovation. In 2012, a

Amanwithmanyhats–BryanWongistheExecutiveDirectorofIntellectPatent&InnovationSdnBhd,amemberofIntellectGroupofIPCompaniesandheisalsoaregisteredPatentAgentandIndustrialDesignAgent.

IntellectGroupprovidesintellectualpropertyconsultinginareassuchastrademark,copyright,patent,industrialdesign,franchisingandlicensing.

Have you ever wondered how all these companies are able to create an environment for innovation to kick in and stay? Before setting the conditions in the

company to promote innovation,

sometimes indirectly evolve into inventions!

In order to stabilise nitroglycerin, Alfred Nobel’s brother was killed through an explosion. This problem motivated Alfred Nobel to work on ways to contain the explosive liquid. Some say that at one time, when transporting nitroglycerin, the can containing the liquid leaked on the material containing the cans, called kieselguhr, and it was absorbed perfectly, leading to the discovery of dynamites, which was very much used in the construction industry.

For example, in order to fulfill the current

needs for sustainability, many green buildings are being created. One example of a successful green building is the Bank of America Tower at One Bryant Park which fully optimises usage of natural sunlight, reusing of rainwater and is made largely of recycled materials. This idea of green building was created by Frank Lloyd Wright from his term of “organic architecture” which means buildings which adapts with nature of its surrounding. This essentially works in favour of solving the problem of global warming and sustainability.

few researchers from Universiti Teknologi Malaysia won the special award for their invention of Energy Dissipation System to Absorb Seismic Effect. Internationally, the British Construction Industry Award (BCIA) is available to recognise players in the construction industry, whereby there is also a category called Technical Innovation of the Year.

Besides awards, one way to recognise the inventors is by way of patent application, where the inventors are

After the motivators are identified, we set the conditions to promote innovation within the organisation. Several conditions are essential within the company in order to launch blue ocean products and services:

• “Anyone can provide idea” concept

• Patent remuneration system

• Flat organisation

• Innovation as KPI of every employee

• Technology mining

duly mentioned in the published patents and have an opportunity to monetary gains from a granted patent.

Basic Motivator #3Noble cause for mankind

This applies to some of the selfless inventors, who work hard thinking of ways to solve problems by inventing, in order to give back to the society. These inventors publish their work without applying for any patent rights, so that the society is able to utilize and refer to their work.

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Flat Organisation

Many times we will see the management of an organisation pass the innovation task to their R&D and product marketing departments. The R&D team will usually innovate based on their research on current products for improvement while the product marketing department will gather the needs and requirements from customers to integrate it in the products to be created by the R&D team.

Although the implementation of client based research is very useful throughout the years, there is a need

“Anyone can provide idea” concept

to further enhance this capability. Innovation is not only for product-based organisations, but also service-based organisation. There are still many untapped potential, skills and talents within the organisation that can be unveiled.

Instead of just relying on the R&D team and product marketing to come up with new ideas, products and features, everyone in the organisation should be encouraged to provide ideas. When we say everyone, it really refers to EVERYONE in the organisation.

Patent remuneration system

We often hear of big corporations or multi-national companies having patent remuneration system, whereby employees are encouraged to submit invention disclosure applications to their internal patent committee for internal approval

for their inventions to be applied for patent by the company. The said encouragement is in the form of monetary benefits, whereby the inventors will be paid a fixed sum when their invention is approved to be applied for patent by the company.

by the research team. By doing this, the researchers will also feel that they are working closely with the top management and feeling of ownership to the research project will arise.

Therefore, there needs to be a flat or lean organisation in order to make sure the top management is kept up to date on the latest research developments

A major problem in big corporations is that too many corporate levels have been created due to the large headcount in the company. There may be up to 10 levels between the position of a junior engineer and a vice president. This will affect the quality of research to a great deal because information and requirements will

diminish as they go through all these levels. Imagine when the VP sets a certain direction of the company when researching on product the moment it reaches the actual researchers, the initial intention may have eroded. Also, the time to market will also be lengthier due to the multiple levels of approvals needed.

Innovation as KPI for every employee

Usually KPIs for employees in a company would be on their ability to meet deadlines, quality of work, communication with colleagues, teamwork, etc. One very important criterion in the KPI, which should be included in every organisation, is innovation. This KPI should be across the board, meaning it should be in every department, be it finance, R&D, marketing, purchasing, manufacturing, etc.

For example, even an executive in the purchasing department can be evaluated in terms of the improvements being injected to the operations, say, leasing company IT equipment instead of buying them upright due to the depreciation value of such technology equipment. Many employees tend to only perform according to the ‘standard procedure’ set by the company or their predecessors and do not crack their heads to think of better solutions.

Technology Mining

Most research centres or R&D departments in larger corporations have their own way of performing technology mining. It is a term used to illustrate an action of studying the currently available technologies in the market in order to find an unexplored area to serve as the direction for a research project, before a research project is started. Among the ways that technology mining can be done is to do online research on their competitor’s current products, search available publications in the market or from universities on that area, and others.

One very good, effective and robust way to study

the ‘unexplored region’ for research is through patent database search. This is because there may be individuals or companies out there who have filed patents on certain technologies or products, but have yet to commercialise those inventions. If a researcher were to just perform technology mining using website on current products in the market, they might miss this very important feature. Even if a product has yet to be commercialised or brought to the market, as long as it is patented, the patent owner can always take action towards anyone who produces, sells and exploits that same product.

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TheMalaysianPropertyDilemma

putting pressure on younger Malaysians to rush to buy their dream homes now before it is too late when they cannot afford to buy.

Are these perceptions “facts” or “fantasies”?

To find out if these perceptions are facts or fantasies, we will examine the movement of property prices in Bukit Beruntung in Selangor and Taman Desa, Overseas Union Garden, Bangsar Baru and Wilayah Complex all in Kuala Lumpur from as early as 1981 until 2011 as they are listed below:

Dr.ErnestYYCheongholdsaDoctorofBusinessAdministration(DBA)andanMBA.HeisalsoaCharteredSurveyor,RegisteredValuer,Auctioneer,ArbitratorandSeniorPartnerofErnestCheongPTLCharteredSurveyors.Contacthimatenquiries@ecptl.comorvisitwww.ecptl.com

by Dr. Ernest Y Y Cheong

Features

Why do people buy properties?

Why do people buy and own property? Some Malaysians buy properties for investment; some for speculation and fast return. For most Malaysians it is a place to call home and raise a family.

Often, we hear of Malaysians buying properties "off-the-plan" and selling them once they are completed. Depending on personal objectives, each individual typically will have different criteria and factors when assessing the location and type of property to buy. Location, Location, Location!

Why do Real Estate Agents always chant "Location Location Location"? Is this statement always true? Are there other equally important factors to consider when buying and selling property?

Property prices will not fall but will continue to increase

There is a perception among Malaysians that, be it a home, an office or a shop, property prices in Malaysia will continue to increase and rise thus

Bukit Beruntung, Selangor

Year Property Type Land Area Sale Price Price/Sq. Ft %

9/1993

2 Storey Terrace House

1,600 sq ft 100,000 63 100

7/2000 2 Storey Terrace House

1,400 sq ft 85,900 61 97


2,100 sq ft 27,500 13 21


2,100 sq ft 72,000 34 54

Wilayah Complex, Jalan Dang Wangi (Jalan Campbell), Kuala Lumpur


2/1981 Shop-Lot 280 sq ft 163,800 585 100

9/1989 Shop-Lot 351 sq ft 125,000 355 61

10/2002 Shop-Lot 146 sq ft 41,000 281 48

3/2006 Shop-Lot 387 sq ft 120,000 309 53

10/2010 Shop-Lot 193 sq ft 70,000 361 62

4/2011 Shop-Lot 140 sq ft 57,150 408 70

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FeaturesBusiness Advocate

Jalan Hujan Emas 1, Overseas Union Garden, Kuala Lumpur



1,600 sq ft 250,000 156 100


1,600 sq ft 260,000 162 103


1,600 sq ft 310,000 193 124


1,600 sq ft 280,000 175 112


1,600 sq ft 380,000 237 151

Jalan Desa Mesra, Taman Desa, Kuala Lumpur



1,872 sq ft 185,000 98 100


5,424 sq ft

650,000 119 121


5,263 sq ft 900,000 171 174


2,156 sq ft 840,000 389 396


2,259 sq ft 580,000 256 261

High Income Family RM RM

Monthly Family Income (2013) 14,000

Monthly Expenditure

EPF Income Tax Grocery House Rent (Live in own house)Car Loan Car Maintenance & Petrol Food (Dine-out) Children’s Education & Related Expenses Children Pocket Money Others Emergencies

1,5402,20080002,500800600800800500500 11,040

IncomeSurplusavailabletopayHousingLoan 2,960

Malaysian Families RM

High Income Family 2,960

Middle Income Family 1,720

Low Income Family 520

High Income Family with RM14,000 monthly income

Monthly Income Surplus RM2,960

Eligible 30-years Housing Loan RM488,932

AffordablePropertyPrice RM550,000

AffordablePropertyType 2-StoreyTerraceHouse

Location of Property Taman Desa/Overseas Union Garden in Kuala Lumpur

Middle Income Family with RM8,000 monthly income

Monthly Income Surplus RM1,720



AffordablePropertyType Apartment

Location of Property Taman Desa/Overseas Union Garden in Kuala Lumpur

Low Income Family with RM3,000 monthly income

Monthly Income Surplus RM520



AffordablePropertyType Low/MediumCostFlat

Location of Property Taman Sri Sentosa in Kuala Lumpur

Middle Income Family RM RM


Monthly Expenditure


88070050001,500700400500500300300 6,280

IncomeSurplusavailabletopayHousingLoan 1,720

Low Income Family RM RM


Monthly Expenditure


18003000400300100300300300300 2,480

IncomeSurplusavailabletopayHousingLoan 520

Fluctuations in property prices

Affordability Tests

We shall now follow the fortunes of the High Income family earning RM14,000 monthly, Middle Income family

What can Malaysian families afford to buy?

Premised on the above analysis Malaysian families likely may have

income surpluses to pay for their Housing Loans as listed below:

Jalan Telawi 6, Bangsar Baru, Kuala Lumpur



1,760 sq ft 456,000 259 100


1,760 sq ft 790,000 448 172


1,760 sq ft 610,000 346 133


1,760 sq ft 850,000 482 186


1,760 sq ft 1,180,000 670 258

The above price analysis shows that prices of terrace houses in Bukit Beruntung in Selangor from 1993 to 2006 (13 years period) fell by 79% from RM100,000 in 1993 to RM27,500 in 2005.

In Wilayah Complex in Kuala Lumpur, prices

of shoplots from 1981 to 2011 (30 years period) fell by 52% from RM585 per sq ft in 1981 to RM281 per sq ft in 2002.

However in Bangsar Baru, Taman Desa and Overseas Union Garden all in Kuala Lumpur prices of terrace houses increased by 158% from

1999 to 2011 (Bangsar Baru), 51% from 1999 to 2011 (Overseas Union Garden) and 161% from 1991 to 2011 (Taman Desa).

Can Malaysians afford to buy their Dream Homes?

Malaysian families are broadly categorized into 3 Income Groups: High Income with RM14,000 monthly income, Middle Income with RM8,000 monthly income and Low Income with RM3,000 monthly income.

Families with RM3,000 to RM8,000 monthly income are considered Lower Middle Income families and those with RM8,000 to RM14,000 monthly income are considered Upper Middle Income families.

For this Study, we will only focus on the High, Middle and Low Income Malaysian families.

"ItisFANTASYthatproperty priceswillcontinuetoincrease andwillneverfall.Likestocks andshares,goldandother commodities,propertyprices CANRISEandCANFALLand actuallyDORISEandDOFALL."

earning RM8,000 monthly and Low Income family earning RM3,000 monthly as follows:

We assume the 3 Income Group families will need Housing Loans from Banks to help them buy their Dream Homes. With the above listed income surpluses available to pay

for their Housing Loans, how much can they borrow from the Banks?

The figures below show what these Malaysian families can afford to buy:

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Business Advocate

The Malaysian Property DilemmaMalaysians are now suffering

Today Malaysian families living in Kuala Lumpur and Petaling Jaya have much lower living standards than that of

High Income Family with RM14,000 monthly income

Year Affordable Property Type Location City

1970s 2-Storey Detached House Damansara Heights Kuala Lumpur

1980s 2-Storey Detached House Bangsar Kuala Lumpur

1990s 2-Storey Detached House Taman Seputeh Kuala Lumpur

2013 2-Storey Terrace House Taman Desa Kuala Lumpur



1970s 2-Storey Detached House Taman Seputeh Kuala Lumpur

1980s 2-Storey Detached House Taman Desa Kuala Lumpur

1990s 2-Storey Terrace House Overseas Union Garden Kuala Lumpur

2013 Apartment Overseas Union Garden Kuala Lumpur



1970s 2-Storey Terrace House Overseas Union Garden Kuala Lumpur

1980s Apartment Taman Desa Kuala Lumpur

1990s Apartment Overseas Union Garden Kuala Lumpur

2013 Low/Medium Cost Flat Taman Sri Sentosa Kuala Lumpur

How did we fall into this “Malaysian Property Dilemma”? How did Malaysians get into this endless cycle of fear and anxiety that translates to their unending chase of the proverbial rainbow of “ever rising property prices”.

What can we do?

The newly elected Federal Government can and should lead Malaysians into finding possible solutions and give hope to future generations of young Malaysians.

You may want to visit www.ipropertydata.com to check on property prices before you make your next property purchase.

their parents and grand parents in the 1970s, 1980s and 1990s.

To appreciate how much

living standards in Kuala Lumpur and Petaling Jaya have fallen since the 1970s, we shall examine the comparative charts below:

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22 23

Aligning such an interest of becoming a high income nation has to be driven by industries, which has the capability of such economic growth. So which industry do we focus on to deliver such results? And what would be a reasonable figure to achieve it? In the projection done last year, the Economic Report released by the Ministry of Finance identified the construction sector to expand 11.2% in 2012/2013. In comparison with other industries, the construction sector is the leader in the area of expected growth for the Malaysian economy. The last quarter of 2012 proved to be challenging. Even with such challenging conditions, the construction sector expanded by 27.2% which was spearheaded by the private sector.

The sector recorded RM22.45 billion worth of work between October and December of 2012. The big questions we need to ask ourselves in particular are, what drives this sector to such heights, and what are the underlining issues

Whilewemaybestrivingtobecomeahigh-incomenationbytheyear2020,whatwedotodayisunderstandablycrucialinachievingthatdream.Inparticular,theMalaysianeconomyhasbeenfavorableasaninvestmentdestination.TheincreasingrisingcostsincountriessuchasChina,andJapan,hasdivertedsuchinvestments,whichisaboostinachievingthedreamofbecomingadevelopednationby2020.

we need to consider, to ensure we stay on the right track of achieving the expected growth.�

The critical success factor (CSF) of this sector is determined by several factors. One of which is the economic forces.

ManagingEmployeesintheConstructionSector

Although we have a healthy contribution towards the Gross Domestic Product (GDP) the development of the construction sector is highly sensitive towards other sectors of the economy. Another area we need to look at is the reluctant factor of locals not wanting to join the construction industry. Perhaps, the reluctance could be due to the pricing of the construction jobs handed not being lucrative enough.

There has also been increasing cases where the project complexity has also taken a toll on the way projects are executed. Whilst decision-making

on complex projects have been entrusted to specialists, the execution of certain projects delayed could be due to detail debating and careful analysation.

The high demand of construction activities have also attracted a huge number of foreign workers. Another reason why we should focus on this particular area is because the foreign workers are running the locals out of jobs. According to the Construction Industry Development Board (CIDB) as at 2007, 69% of 800,000 workers were foreign people. The employment of such people have caused social issues where in some cases leaving our locals to take a back seat to achieve such growth.

So how do we manage such challenges? We can’t control the economy, neither can we measure complexity. But we can manage the employed

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by Sage Software (M) Sdn. Bhd.

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workforce in our country. If you look closely, you would understand that the construction sector is a labour intensive sector. In order to be ahead in the game, such need to know how to manage the employees first.

Managing cannot appease the issues that foreign workers bring to the table, but it can control the way you look and do things. As a developing sector it is important to manage the employees at work to achieve not only completing a project on-time, but with quality.

It all starts with how we look at our human resource (HR) department. Instances where tracking punctuality at work, absenteeism, loss of timecard, and buddy punching are just some of the issues faced by the sector. Furthermore, cheques are written by the superior and given to the workers without much thought sometimes.

What about the imposition of levy on contracts? Are most contractors abiding by the laws given? Failure to comply could leave penalties, being paid by contractors that could severely impact the completion of a project. Further developments within a country would fuel increasing demand on labour. This would give room for issues such as tracking of workers

permit expiration. If not properly controlled, projects could be delayed.

In relation to this matter, the minimum wage amount in the private sector has been set. The matter of concern here is, are all companies within the construction sector law abiding citizens. While we may occasionally route for the road less travelled, failure to comply with National Wages Consultative Council (NWCC) could give rise to unnecessary lawsuits imposed by workers themselves.

There is no definitive answer to the issues above. However, control can be a mechanism that could help cushion the impact. We may look into hiring the best and trying to retain the best. But we do not spend time on looking at how we can simplify and control our process in HR which can be beneficial to the construction sector. Simplifying here meaning integrating one or more systems or processes to perform seamlessly with minimal human interaction.

Integration promotes seamless ways of doing things which could leave your HR department working not only efficiently but effectively. So what integration can we talk about that can assist a growing industry?

Payroll-HR software, time-attendance of

employees, secured payment method which is fast, reliable, and accurate. From the time an employee becomes apart of your organisation till the day they decide to leave, integration of the above helps the functionality of the HR department to be better.

Time taken to process such information could be spent elsewhere on value-added activities when you decide to integrate. Apart from that, errors on employees’ wages could be reduced with automating your payroll software. Security has become a necessity, it could control the way

levy is looked at and tracking of workers permit. There would also be no excuse for, not knowing the updates for minimum wages in Malaysia.

Underpinning all of this is employee satisfaction. As no longer would you have to fill in timesheets or clock cards. When there is employee satisfaction the productivity also increases. Thus achieving growth. So why do we wait for the end to choose, lets integrate our system to achieve not only growth but quantum’s of growth in this sector.

� http://www.btimes.com.my/Current_News/BTIMES/articles/rup15b/Article/

Source:StatisticsDepartment

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Tackling these issues broke through new levels of innovation in infrastructure, newfound methods to deal with cleaning up contamination, and the vastly-improved management of precious resources such the supply of water in urban areas through water reclamation.

Public transportation was also key thrust of the Program, and the public interest in this form of transportation became popular after the idea of using public transportation was successfully brought to the fore. However, one must remember that cooperation was essential to achieving the aims of the Program, not merely in terms of planning, execution,

and responsibilities, but also in the area of expenditure.

In other major cities around the world, like New York City, urban renewal began with the recognition of the importance of public places, the “public realm”, which include roads, public parks, markets, and other infrastructure collectively owned by the public at large. Focusing on the public realm was a straightforward way to concentrate investment efforts that would bring maximum benefit to the society and improve the city in one fell swoop.

Some of the most basic investments into pathways, highways, bridges, and the like, boosted the economy but construction of other, more aesthetic, places like man-made lakes and central parks were an expression of a more mobile society on the move—a society whose daily lives are enhanced by a living space which had beautiful scenery and streets with character to add value to their activities. Indeed, no plan to better a city or to invest for the public good can be done without the participation and approval of society in order to be successful.

SustainabilityandBuildingBetterCities

Themovetowardssustainabilityhasgraduallydevelopedintoaprimaryissueinthepublic'sconscienceoverthepast20yearsaftertheemergenceofthemultinationalinitiativessuchastheKyotoProtocolandRioDeclaration.Sustainabledevelopmenthasinadvertentlymadeanimpactonthewaywebuildcities,orasinthecaseofdevelopingcountries,inf luencedtheexpansionplansofdevelopingcities.Variousgovernmentshavemovedtowardsenvironmentally-soundbuildingpoliciesthatbearsomeiterationofthenomenclature'BuildingBetterCities',acatch-alltodescribeanimprovedapproachtoconstructingcitiestomeetcertainsustainabilityobjectives.

According to a book published by the Australian National University, Australia Under Construction, the Labor Government under Prime Minister Bob Hawke spent AUD816 million over five years, from 1991 onwards, for its Building Better Cities Program. Commonwealth, State, and Territory Governments cooperated to improve urban development processes and the quality of urban life through better urban planning, service delivery, and intergovernmental coordination. Heretofore unheard of successes resulted in the close cooperation between these agencies, leading the authors of this book to credit the Program with "leading the revival of Australian inner cities, the most significant change in urban Australia since the introduction of consumer credit post World War II."

The purpose of the Program was to enable Australian cities to achieve economic growth and micro-economic reform, improve social justice, enact institutional reform, encourage ecologically-sustainable development and improve urban environments and to create more liveable cities. Some of the

individual issues involved in this Program dealt with traffic congestion, inner urban decline in population and employment, rising dependency on cars, the restructuring of labour markets that led to rising structural unemployment in the old industrial suburbs, and concerns with consequent rising inequality across society.

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Business Advocate

Upon examining research done in New Zealand on the concept of Building Better Cities, a collaborative effort by research house BRANZ, the government, and the building industry has resulted in several interesting findings. A discussion paper released by these three parties, Towards Building Better Cities, documents these aforementioned findings. For instance, the paper reveals that “increased liveability, sustainability and competitiveness requires more than support and application of good urban design principles" and that "urban change (can only occur) with a parallel development of the construction industry. The complexity of driving urban development and industry development requires a systematic approach built on

proper understanding on how these systems interconnect.”

As cities are in a constant state of flux, the building and construction sectors play a major role in determining the building of sustainable cities as they are at the forefront and on the ground. The paper recognises that despite the best intentions of local governments to guide urban development, the changes in this industry have many features of an evolutionary system that is blind to future challenges. There is a lack of harmony in four variables involved in this process, which are urban form, the property market, the construction industry, and suppliers. Closer to home, the paper

highlights that there needs to be an understanding on “how residential areas contribute to urban productivity as they provide protection, keep a city’s workforce physically and mentally healthy, and provide a structure that stimulates personal development and education”.

Furthermore, it was discovered that “a sustainable urban environment cannot be built without adequate knowledge of the life cycle of materials and systems used in construction”. As it stands, the evaluation and selection of materials is too focused on the technical tolerances of construction and almost entirely ignores the environmental

performance and environmental impact of building materials. As such, smarter materials will be needed to offset the impending increase in energy cost and satisfy the needs of innovative construction. The road ahead towards the building of better cities is beset with many challenges that will need to be met by various stakeholders in order to succeed. After all, no city is built by one party only, and the cooperation between stakeholders is akin to the interconnected mechanisms in organic growth. The microcosm around us will need to change, sometimes more than we would like it to, in order to achieve a better, more sustainable future for generations to come.

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Business Advocate

the built environment to reduce its negative environmental impact; and ensure new buildings remain relevant in the future whilst existing buildings would be refurbished and upgraded to improve the overall quality of our building stock.

The rating tool examines a building to meet six criterias, which are: energy efficiency; indoor environmental quality; sustainable site planning and management; materials and resources; water efficiency; and innovation. Energy efficiency covers the improvement of energy consumption through

optimal building orientation, minimised solar heat gain through the building envelope, harvesting natural lighting, and the inclusion of the use of renewable energy, testing, and regular maintenance of building. On the other hand, indoor environmental quality is achieved through excellent indoor air quality, acoustics, visual and thermal comfort through the use of low volatile organic compound materials, high-quality air filtration, proper control of air temperature, movement, and humidity. Furthermore, sustainable site planning and management ensures that environmental standards are upheld through the selection of sites with planned access to public transportation, community services, open spaces and landscaping.

To take conservation a step further, sustainable site planning encourages the redevelopment of existing sites and brownfields to avoid encroaching on environmentally-sensitive areas. The implementation of

GreenBuildingIndex:ChangingtheFuture

Theoft-repeatedmantraaboutourchildreninheritingthefutureisnotwithoutitsmerits,andtherealisationthatoureconomicactivitieshaveaprofound—andoftennegative—effectontheenvironmenthasencouragedmanyagovernmenttoinstituteenvironmentally-friendlybuildingpoliciestoaddressthisissue.Ifwecontinueonourcurrenttrajectory,graveenvironmentaldisastersareinstoreforus,andthatiswhyweneedtoactnowtochangethefuture.InMalaysia,onesuchinitiative,theGreenBuildingIndex(GBI),isajointendeavourbyMalaysianInstituteofArchitectsandtheAssociationofConsultingEngineersMalaysiain2009todirectthepropertyandconstructionindustrytoamoreenvironmentally-friendlypath.

The GBI lays out a set of stringent criteria for buildings to be given an environmentally-friendly “green” rating. As such, green-rated buildings are those that are designed, constructed, and operated utilising a holistic design approach to enhance the overall environmental performance of the building and its relationship with its surrounding environment for the purposes of protecting our environment and its ecosystems, safeguarding the quality of our air and water, and conserving our renewable and non-renewable natural resources.

To date, over 50 million square feet of green buildings have been built in Malaysia alone. According to Greenbuildingindex Sdn Bhd, the company which issues the green rating, Malaysia's own green rating tool was “developed specifically for the Malaysian-tropical climate, environmental and developmental

context, cultural and social needs” for several reasons, which are to: define green buildings by establishing a common language and standard of measurement; promote integrated, whole-building designs that provides a better environment for all; recognise and reward environmental leadership; transform

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excellent construction and storm water management as well as reducing the strain on existing infrastructure capacity builds on this. Materials and resources can be kept green by sourcing from sustainable sources and recycled products, as well as to adopt the habit of not wasting materials in the building process. Rainwater harvesting, water recycling, and water-saving fittings ensure a green rating for water efficiency whereas innovative

design and initiatives also contribute towards satisfying the green rating assessment.

The GBI is used to assess residential and commercial buildings, factories, and towns because the move to ensure environmental sustainability happens across the board, and it has been rolled out at a fast pace that is in tandem with the explosion of modern living. Despite the premium price of green-rated buildings, such developments

have been warmly-received, a nod to the fact that the everyman is willing to invest in the future of his society. However, the return on investments are immediate in some cases as green buildings often feature energy-saving characteristics that reduce electricity consumption, for instance. Reduced energy consumption, taken as a whole, has a dramatic effect on the environment. When entire cities use less energy, this translates to a reduction in carbon

dioxide emissions by power plants, and when water is harvested and recycled, this reduces the strain on natural sources of freshwater.

The conservation of our environment and the protection of our future begins at home. It is also secured by watching our working spaces and ensuring that our economic activities leaves the smallest footprint possible on the environment, and then, we can boldly say that the future of our environment is bright.

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Business Advocate

encompass substandard housing, which the study qualifies as being plagued with various maladies including poor water and waste management, old piping and substandard material, overcrowded areas that facilitate the transmission of diseases, and building design that influences the risk of fires and physical injuries from falling .

“Substandard housing may also adversely affect mental health, although the evidence is more tentative,” say the authors of the report, James Krieger and Donna Higgins, and that “excessive indoor temperature has been linked with irritability and social intolerance. Damp, moldy, and cold indoor conditions may be associated with anxiety and depression.”

Looking to London, the authors found that crowding was associated with psychological distress among women aged 25 to 45. Furthermore, they point out that substandard housing conditions can lead to social isolation because occupants are reluctant to invite guests into their homes whereas high-rise and densely-populated buildings can inhibit social interaction because of the lack of shared spaces. Of course, one of the key characteristics of luxurious properties is that the premium placed on the house stems from higher land costs associated with more open and airy spaces, the exclusiveness of these enclaves, and proximity to natural surroundings, whereas cheaper property developments are likely to be too close to sources of vehicle exhaust emissions and noise pollution from busy areas.

In addition to that, the authors say that “sites of improper waste disposal can harbor pests, which can then infest homes. Yet it is possible to design neighbourhoods to

LuxuryvsWellness:AreLuxuryPropertiesAnyBetter?SettingStandardsandCriteria

Whatisthepriceofgoodhealth?Whateverthedollaramountoneaffixestotheirwell-being,oneundeniablefactisthatpropertyprices—intheregion,atleast—havebeenrisingtoapointpastwhatmanypeoplecanafford,whichistosaythatashousingbecomesscarceinhigh-demandareas,theybecomemoreofa“luxury”.Betweenunaffordablehousingandthetrulylavish,multi-millionringgithomes,thebenefitsofwell-builthomesinexcellentareasdohavesomeprofoundhealtheffectswhichwewillexplore.

Building materials are often the first casualty in cutting costs, and one finds that cheap materials affect us in our living and working spaces. The downside is that some materials are only found to be dangerous many years after they are used, such as in the case of lead paint, which was only linked to adverse health effects towards the 1950s despite having already been used for decades. Asbestos is another such example, as it was used liberally throughout the industrial world for a better part of the past 150 years. Although a total ban on asbestos in the UK was only imposed in 1999, many standing structures still contains the material—and hence the risks associated with asbestos dust exposure—once so generously used in construction because it was cheaper than other, more appropriate, building materials such as polypropylene fiber cement and steel-reinforced concrete pipes.

The American Journal of Public Health, which has studied the relationship between housing and public health both in the United States and abroad, is of the opinion that “housing is an important determinant of health, and substandard housing is a major

public health issue” and that “an increasing body of evidence has associated housing quality with morbidity from infectious diseases, chronic illnesses, injuries, poor nutrition, and mental disorders”. With luxury housing on one end of the spectrum, the opposite end would

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promote health by considering sidewalk and street design, the presence of green spaces and recreational sites, and the location of schools, work, and shopping within walking distance of homes”. Indeed, the availability of luxurious property developments would entice retailers to set up shop there, especially those that supply customers with a wide choice of healthy

foods to supplement their diet. Luxurious properties, like premium apartments, also often feature gyms, pools, spas, and saunas to enable residents to live a healthier lifestyle with sufficient exercise.

Author Pooja Mottl, in writing for the Huffington Post, laments that the “foundation of living a healthy life—having

access to healthy food, time to exercise, and the means to purchase the basics—are unfortunately out of reach to a large section of our population” and that wellness is affected by “a wide variety of indicators … such as obesity rates, food availability, prices of food, Type 2 diabetes, and lifespan as it relates to chronic disease”, variables which are, in turn, determined by our living and working spaces.

Are luxury properties any better? What is a “luxury”? Even in developed countries, many do not have easy access to healthy food, and few can afford the luxury of working out on a daily basis. Let us consider what we have explored here. The evidence suggests that the costs of ignoring or being unable to attain a good quality of life may very well contribute to the end of healthy living.

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TheadvocatespeakswithMr.ChristopherBoyd,ExecutiveChairmanofCBRichardEllis(Malaysia)SdnBhdontheMalaysianpropertymarket.

1Can you briefly describe CBRE’s history and in

what areas it has been active in Malaysia?

We affiliated our company with the international group, CBRE, in late 2009. We were previously known as Regroup Associates Sdn Bhd, a consultancy formed in 1995. The three partners have many decades of experience in Malaysian property consultancy. We are registered valuers and agents and we provide a full range of services including valuation, consultancy and research, property agency and management, and project management.

2 Could you highlight some prominent

developments in the Malaysian property market that have happened or are about to happen within H1 of 2013?

There are so many! A core Malaysian expertise is the development of master-planned projects

on a scale that would make many westerners blanche! A random sample that we are going to see take shape this year includes: Tun Razak Exchange, the new financial hub with 23 million sq ft on 75 acres adjoining the Golden Triangle; KL Eco-City, a residential and office development of 8.0 million sq ft on 24 acres facing Mid Valley; PJ Sentral, PJ’s new commercial hub of 8.5 million sq ft on 40 acres close to the PJ Hilton; and Damansara City, a mixed use development of 2.2 million sq ft on an 8.5 acre site in Damansara Heights. That’s just a sample, I haven’t even touched on Iskandar Johore, and Penang yet!

3 How have residential and commercial

properties been doing? Are they seeing similar trends or has there been an inverse relation lately?

In the Klang Valley, residential property stabilized late last year

after three frenetic years when values rose as much as 30%. Now that the general election is out of the way, there is a strong mood of confidence but this may not translate into higher values immediately because there will probably be a flood of supply coming from projects that were held back until GE13 was dispensed with. By Q3 we expect prices to pick up and reach new heights by next year. The office space market responds to a completely different set of dynamics. There has been a bit of an oversupply building up and this will keep rents and capital values on an even keel until at least 2015. Vacancy rates are currently about 15% which is not life-threatening, and demand has been quite healthy, led mainly by expansion in the oil and gas industry. There are some very exciting new office developments in the pipeline and the Klang Valley now has a respectable 80.0 million sq ft of space which puts it on par with Bangkok, Singapore and Manila. In the retail sector, the market remains very strong, pushed on by impressive

InterviewwiththeExecutiveChairmanofCBREMalaysia

Mr.ChristopherBoyd’scareerspans42yearsinthepropertyprofession,mostofwhichhasbeeninMalaysia.HeisaregisteredvaluerandagentinMalaysiaandjoinedCBRichardEllisaftersixyearsatthehelmofalistedMalaysiandevelopmentcompany.Priortothat,hehasheldseniorpositionsintwootherinternationalpropertyconsultancies.

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GDP growth and the demographics of a young and upwardly mobile workforce. Prime retail rents have nearly tripled since 1999 and we now have about 49.3 million sq ft or 7.47 sq ft per head, in 142 malls in the Klang Valley.

4 From a regional standpoint,

how has the Malaysian property market been doing?

Doing OK. Malaysia is probably the least understood market in the region, yet perversely it is one of the most open when it comes to foreign ownership. It is characterized by steady growth and stability.

5 Have there been any regional

developments that will benefit or adversely affect the Malaysian property market?

Well of course there is the prospect of the high speed rail link between KL and Singapore; that is very exciting. Then I think there is the slow realisation in the region that Malaysia really has all the 21st century infrastructure but can still offer a great lifestyle and an unbeatable cost. We are seeing an

increasing number of multinationals expand their existing facilities here or move into Malaysia for the first time, to take advantage of these benefits.

6 Tell us about private foreign

investments into the domestic property market as well as Malaysian property investment trends abroad.

I suppose the myth is that foreigners are buying up the expensive condos in areas such as KLCC and Mont’ Kiara. The reality is that domestic buyers account for 75% of sales. In the next year or two, we will see some very luxurious apartments launched in KL, and I believe the percentage of foreign buyers will increase because prices are still very cheap on a regional basis. In Iskandar, Johore, of course Singaporean interest in the residential market is strong, and that is only to be expected. In terms of the market for large scale investment properties, we see strong interest from Singaporean institutions, but they are not alone and in recent months we have experienced interest from institutions from a variety of countries including Germany,

Sweden, China and Australia.

A feature of the property scene in recent years has been acquisition of investment grade property in Australia and England, principally London, by funds such as EPF and PNB. This is part of their diversification programmes and although the transaction size has been large, in total it represents only a tiny fraction of their entire portfolio. Real estate investment is now a global industry; we expect some focus on investment opportunities in the USA in years to come.

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Company: IMAXTECH ELECTRONICS SDN BHDName: Mr. Ooi Chin HinDesignation: MDAddress: 15-02-27 Bayan Point, Medan Kampung Relau 11900 Bayan Lepas, PenangTel / Fax: 04-645 6080 / 04-645 5312Business Sector: Trading(Import/Export)

Company: NAUTIC OFFSHORE PTE LTD (MALAYSIA BRANCH)Name: Mr. John GronbechDesignation: CEOAddress: 3rd Floor, Block K-01-3 Signature Office, Kota Kinabalu Time Square Off Coastal Highway Kota Kinabalu, SabahTel / Fax: +65-6298 2671 / +65-6298 2673Business Sector: Construction/Engineering

Company: ORTUS EXPERT WHITE SDN BHDName: Mr. Gurdev Singh A/L Jagjit SinghDesignation: MDAddress: A-5-9 Empire Tower, SS16/1 47500 Subang Jaya, Selangor DETel / Fax: 03-5021 9082 / 5021 9083Business Sector: Retail/Wholesale

Company: REGENCY SPECIALIST HOSPITAL SDN BHDName: Ms. Chin Wei JiaDesignation: CEOAddress: No. 1 Jalan Suria Bandar Seri Alam 81750 Masai, JohorTel / Fax: 07-381 7700 / 07-388 7666Business Sector: Pharmaceutical/Medical

Company: RHOMBUS CASTORS (M) SDN BHDName: Mr. Ronnie TeoDesignation: MDAddress: Lot 70 Kulim Industrial Estate 09000 Kulim, KedahTel / Fax: 04-489 1266 / 04-489 1271Business Sector: Others (Unspecified)

Company: RHP (MUKAH) PTE LTDName: Mr. Bryan YamDesignation: GMAddress: Level 26 Menara Maxis Kuala Lumpur City Centre 50088 Kuala LumpurTel / Fax: 03-261 5268 / 03-2615 2699Business Sector: Oil/Gas/Petrochemicals

Company: SARAFIAH SOAP INDUSTRIES SDN BHDName: Mr. Shah FaisalDesignation: Executive DirectorAddress: Lot 60961, Jalan Wawasan A4/KU7 Sungai Kapar Indah Industrial Park 42200 Klang, Selangor DETel / Fax: 03-3101 2830 / 03-3101 2831Business Sector: Non-MetallicManufactures

Company: SIMPLE INDUSTRIES SDN BHDName: Mr. James Alan SinclairDesignation: DirectorAddress: Unit No. 02-07, Jalan Austin Perdana 2/23 Taman Austin Perdana 81100 Johor Bahru, JohorTel / Fax: 07-357 6733 / 07-357 6732Business Sector: Consultancy / Business Services Company: SPORTATHLON (MALAYSIA) SDN BHDName: Mr. Kurt StocksDesignation: MDAddress: Level 6, Wisma Mont' Kiara No. 1 Jalan Kiara, Mont' Kiara 50480 Kuala LumpurTel / Fax: 03-6200 0800 / 03-6200 0811Business Sector: Others(Unspecified)

Company: TELEDYNE INSTRUMENTS MALAYSIA SDN BHDName: Mr. Shadi AwwadDesignation: VP – Asia PacificAddress: No. J-03-2 Dataran Glomac Jalan SS6/18, Kelana Jaya 47301 Petaling Jaya, Selangor DETel / Fax: 03-7805 7712 / 03-7805 7710Business Sector: Oil/Gas/Petrochemicals

Company: VTLS TECHNOLOGIES SDN BHDName: Ms. Gina PhanDesignation: MDAddress: 1017 Block A, Damansara Intan 1 Jalan SS20/27 47400 Petaling Jaya, Selangor DETel / Fax: 03-7118 3350 / 03-7118 3353Business Sector: ICT Communications

Company: VALE MALAYSIA MINERALS SDN BHDName: Mr. Andre Guilherme KopperschmidtDesignation: Director Address: UNITS 17-F-PB S-2, Tower Regency Jalan Dato Seri Ahmad Said, Greentown 30450 Ipoh, PerakTel / Fax: 05-240 0500 / 05-240 0600Business Sector: Chemicals/Minerals

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MICCI NEWS

40 41

SMECorp-MICCIMentoringProgramme

SME Corporation in collaboration with MICCI organised a SME Mentoring Programme on 29 March 2013 at the Best Western Premier Dua Sentral. Close to 90 participants from various industries attended the full day programme which featured speakers from Ernst & Young, Philips Malaysia, Kraft Foods and Top Glove.

Key focus areas that were highlighted during the programme included market expansion and new opportunities, overcoming business risk, building own product quality, and learning how small businesses can gear up towards globalisation.

MICCI in collaboration with Marsh Insurance Brokers (M) Sdn Bhd and Mercer organised a half-day seminar titled “Employee Benefits for Employers” on 17 April 2013 at the Sime Darby Convention Centre. The aim of the seminar was to understand how to leverage existing benefit investments to create a benefit programme that can serve as a key competitive differentiator.

KualaLumpur

MICCI News

The key element of the mentoring programme was to assist SMEs in establishing best business practices, build their capacity en route to partaking in the global market and in becoming suppliers to international corporations.

Seminaron“EmployeeBenefitsforEmployers”

KualaLumpur

The invited speakers were Ms. Joan Collar, Regional Leader for Employee Health and Benefits - Asia of Marsh and Ms. Liana Attard, Principal, Regional Benefits Management Leader Employee Health & Benefits – Asia of Mercer.

Ms. Collar’s presentation, which focused on the health and lifestyle challenges in Asia,

highlighted that employers are investing more in employee health and wellness programmes. The reasons for this include attracting and retaining talent, improving productivity and performance and promoting protection and wellbeing.

Ms. Attard then gave an overview on how

employers should include a market competitive benefit package that addresses employee’s health and wellness requirements, encourages consumerism and offers the best value to different employee profiles within the organisation.

The seminar which attracted close to

30 participants concluded with a hi-tea and networking session.

FreeTradeAgreement:BenefitsandImpacts

MICCISignsMoUwithZonesCorp

MICCI took the liberty of inviting Mr. Peter Brian, Principal Assistant Director of the Ministry of International Trade and Industry (MITI) to give a presentation on Free Trade Agreements (FTAs) during the Chamber’s Trade and Investment Council meeting on 26 April 2013.

A Memorandum of Understanding (MoU) was signed between MICCI and the Higher Corporation for Specialized Economic Zones – ZonesCorp of Abu Dhabi on 25 March 2013 at the JW Marriot Hotel, Kuala Lumpur.

According to Mr. Brian, FTAs complement the overall trade policy of the World Trade Organisation (WTO) and comprises several key advantages including preferential market access, encouraging economic and technical cooperation, attracting Foreign Direct Investments (FDIs) and creating larger markets among others. MITI has

parties to jointly work together to identify and promote potential investment opportunities in both regions. He stands firm that both MICCI and ZonesCorp are capable of further developing this collaborative effort into workable plans in the near future.

The Chamber believes that the platform created by the MoU will further enhance the exchange of ideas and information that will bring long term benefits to MICCI Members in particular, and businesses in both Malaysia and Abu Dhabi as of whole.

KualaLumpur

KualaLumpur

MICCI President, Mr. Simon Whitelaw stated that the MoU was timely and represents the commitment of both

been implementing specific outreach programmes to target companies, in particular the Small and Medium

Enterprises (SMEs) in its efforts to create awareness on FTAs.

Mr. Brian also stated that Malaysia is no longer a beneficiary of the Generalised Scheme of Preferences (GSP), which would further burden Malaysian companies exporting to the European

Union (EU). However, the proposed FTAs with the EU and the Trans-Pacific Partnership (TPP) would benefit Malaysian companies and mitigate the negative effects from the GSP withdrawal.

He concluded in his presentation that trade liberalisation positively attributes towards the country’s development and international trading interest.

Business Advocate

42 43

MICCIPerakBranchVisitstheSingapore&CanadianHighCommissions

MICCI News

recently published “Perak Industrial Action Plan”, fast track procedures for the various licence applications and some niche industries that were actively being promoted.

The High Commissioner then stated that they were interested in integrated farming and also in the supply of fresh vegetables to Singapore. Thus, the possibility of pursuing agricultural activities were keenly discussed with special focus on processed food-repackaging. Other areas discussed were on health tourism as well as some of the major tourists attractions in the State.

The High Commissioner agreed to bring a group of Singapore investors up to Perak to further explore the business potential of the economic activities

MICCI Perak Branch in collaboration with InvestPerak organised a working visit to the offices of the High Commission of the Republic of Singapore and the High Commission of Canada on 4 March 2013.

The MICCI delegation was represented by its Executive Director, Mr. Stewart Forbes, Perak Branch Chairman, Mr. Leong Hua Kooi, Vice-Chairman, Dato’ Hew Choy Kon and Branch Executive, Ms. Subasini Uthra. InvestPerak on the other hand were represented by En. Mohd Hizaz B. Mohd Ibrahim and En. Ahmad Shahir B. Abdul Aziz, Senior Managers for Investment Promotion.

At the first visit to the High Commission of Singapore, the MICCI delegation was welcomed by H.E. Ong Keng Yong, High Commissioner, Ms. Philomena Aw (First Secretary), Mr. Tan Chee King (First Secretary) and Ms. Adeline Quek (Centre Director, KL, International Enterprise, Singapore).

After the exchange of formalities, En. Hizaz of InvestPerak presented on recent updates in the State of Perak such as the

discussed. Thereafter, a lunch was hosted by the High Commissioner.

Later that afternoon, the MICCI delegation proceedeed with the second visit to the High Commission of Canada where they were greeted by its Senior Trade Commissioner, Mr. Douglas R. Bingeman and his Trade Commissioners, Mr. John Nojey, Mr. Ross Firla and Ms. Denise Westerhout.

En. Hizaz again took the liberty on presenting the latest incentives offered by the State of Perak and highlighted on some prominent foreign investments located in the State. Mr. Douglas expressed his interest in visiting Perak with some Canadian investors since presently, there were no

Canadian investments on record. In addition, he stated that he wished to explore investment opportunities in 5 main areas namely, aerospace, oil and gas, agriculture, education and ICT.

Mr. Douglas also mentioned that the agricultural sector was one possible area since the supply of livestock mainly cattle, could be a viable investment option along with integrated farming.

Mr. Leong stated that the Perak Branch and InvestPerak would be delighted to host a visit for Mr. Douglas and his entourage to Perak to look into the aforesaid areas.

The visit ended on a positive note from both sides.

Perak

Business Advocate

Penang

NetworkingonBoardGentingWorldCruiseShip

The Penang Branch Committee held it’s first “floating” monthly branch committee meeting and a networking lunch on board the Genting World cruise ship on 24 April 2013. Starcruises Travel Service (M) Sdn Bhd who recently renovated and refurbished the cruise ship, generously sponsored the occasion, which drew more

than 80 members and non-members for the networking lunch.

Docked along quayside at the Swettenham

Pier, Capt. Tony Lund welcomed everyone on board and introduced some of his managing crew before Mr. Eric Sia, Assistant Vice-President Penang Operations of Genting Hong Kong, gave a short presentation on Starcruise Travel Services (M) Sdn Bhd.

Ms. Lacey Sim and Mr. Gregory Chan then enlightened the crowd on the various cruises available from Penang, Singapore and Hong Kong while stating that the ship, which housed 32 cabins, was available for daily charters at RM40k per night inclusive of 4 meals.

Guests had an enjoyable afternoon of meeting new friends over a sumptuous buffet spread.

44 45

NetworkingEveningatParkroyalResort

The Penang Island has always had a unique attraction with its myriad of hotels, popular beaches and scenic views, one certainty that MICCI Penang often took advantage on when it came to organising its business events. Essentially, the Penang branch organised a networking evening on 22 March 2013 at the garden courtyard by the beach, at the Parkroyal Resort.

The organising chairman of the event, Mr. Eric Lund, welcomed closed to 50 guests before introducing Mr. Robert Kirby of Kirby Group, who gave a brief talk titled “The Leader in You”. Mr. Kirby also generously sponsored two books by Sir Richard Branson titled “Like a Virgin” as lucky draw

prizes for the event.

In the midst of the enjoyable evening, storm clouds forced the party to rush indoors as the networking continued without dampen spirits. Kudos to the management and staff of Parkroyal who acted swiftly in relocating the party!

MICCI News

Penang

Business Advocate

CourtesyVisitbyH.E.Consul-GeneralofRoyalThaiConsulate-GeneralofPenang

H.E. Mrs. Srirat Vathesatogkit, Consul-General of the Royal Thai Consulate-General of Penang paid a courtesy visit to MICCI Penang on 19 April 2013.

Her Excellency had only recently been posted to Penang, in late November 2012, and was eager to touch base with the business community in the State. Her last visit to Penang was about 30 years ago when she was a student thus she was amazed by the landscape of a more developed Penang.

Apart from the courtesy call, Mrs. Srirat’s intentions were to extend invitations to the branch Committee to attend the “Penang Story Symposium: The Khaw

and Na Ranong family of Penang and Thailand” and the “Thailand-Malaysia Business Networking Forum” organised by the Penang Heritage Trust, The Royal Thai Embassy

and the Royal Thai Consulate-General of Penang which took place in May 2013.

Having exchanged formalities and invites,

Johor

Penang

Mrs. Srirat exchanged views on women in careers, especially in Asia, and the business opportunities between South Thailand and North Malaysian States before taking her leave.

MICCIAscendasNetworkingEvening

Close to 60 business executives attended a networking evening organised by MICCI Johor in collaboration with Ascendas on 14 March 2013 at the Thistle Johor Bahru.

Ascendas who specialises in master planning, developing, managing and marketing IT parks, shared their experiences and success stories during the informal evening. Guests were treated with interesting developments on the

company’s upcoming joint venture with UEM Land to develop an integrated eco-friendly tech park in Nusajaya Johor. The project is expected to be completed in three phases over 9 years and would eventually host a business community of about 34,000 people.

The evening provided an insightful overview on Ascendas business ventures while allowing for new business relationships to be forged.

46 47

REGIONAL FOCUS Johor

Regional Focus

IskandarMalaysia: BeginningtoShapeUp

2012wasdubbedthe“tippingpoint”forIskandarMalaysia,asitwastheyearthatseveralcatalyticprojectssuchasEduCityandLegolandwerecompleted,alongwithmajorinfrastructureworkssuchastheEasternDispersalLinkandtheSenai-Desaruhighway.ItwasalsotheyearinwhichSingaporebegantotakeaseriouslookatthepossibilityofinvestinginIskandarMalaysia,asanaturalhinterlandtoSingapore.

This was then marked by Ascendas joining UEM Land in a JV to develop a RM3.7 billion tech park in Nusajaya in October 2012, followed by CapitaLand announcing the undertaking of a large-scale integrated development in Danga Bay in February 2013.

byCBRE Malaysia

Residential / Townships Residential supply is expected to grow substantially, in line with current active construction activity. New master-planned townships have flourished with

OfficeNo new private purpose-built office space has entered the market since 2004, with the quality of existing space being generally mediocre. On average, occupancy rates for office buildings hovered at around 75%

with rental rates at below RM3.00psf. Nonetheless, upcoming office buildings under construction which are better laid out with modern specifications are expected to improve the overall market rental rate in the near future.

the completion of new connecting highways within IM, and demand for townships / integrated developments are seeing an increase along with price premiums.

Source:IRDA

Source:ValuationandPropertyServicesDepartment Source:CBREResearch

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Business Advocate

Hotel

Condominiums High-rise residential property in IM is currently the most highly sought after property by investors, with selling prices at selected projects exceeding RM1,000 psf on top of remarkable sales rate achievements. Incoming supply of

The hotel sector is slowly gaining strength, supported by improved tourism activities within IM. Performance was mixed across all segments and has remained low-profile when compared against other cities such as Kuala Lumpur and Singapore. However, a number of international hotel

luxury condominium units into IM appears to be fortifying. On the other hand, most of the older high-rise residential properties are transacting at less than RM400psf, depicting a buyer preference for newer schemes.

operators have signed on to properties in IM (including the Hilton, Shangri-La and Ascott groups), with more expected to follow suit and venture into the previously untapped market in IM in the next few years. Following this, a boost in sector quality and competition can be expected.

CBRE Group,aFortune500andS&P500companylistedontheNewYorkStockExchangeandheadquarteredinLosAngeles,istheworld’slargestrealestatefirmbyrevenueandtheworld’sleadingproviderofdiversifiedcommercialrealestateservices.

CBRichardEllisoffersstrategicadviceandexecutionforpropertysalesandleasing;corporateservices;property,facilitiesandprojectmanagement;mortgagebanking;appraisalandvaluation;developmentservices;investmentmanagement;andresearchandconsulting.

Retail The retail sector is one of the fastest growing sectors in IM. A handful of significant malls continue to be popular and boast close to full

occupancy on the back of limited choices for shoppers. Future malls will be sizably larger with a couple of ‘megamalls’ on the drawing board.

Source:CBREResearch

Source:CBREResearch

Source:ValuationandPropertyServicesDepartment

Regional Focus

TheChangingSkylineofJohorBahru

TanSriLimKangHooisamanonamission.AsmanagingdirectorofIskandarWaterfrontSdnBhd(IWSB),TanSriLimhasintimateknowledgeofJohorBahruanditsdevelopmentchallenges.However,thestatecapitalisenjoyingarenaissanceofsortslately.Asoneofthefivef lagshipdevelopmentzonesinIskandarMalaysia,ithasbecomeafocalpointfordevelopmentandrebirth.Tohim,JohorBahru'srenewalhasbeenalongtimecoming,anduntilrecently,theregionhadnotrecoveredfromthenegativeimpactofthe1997Asianeconomiccrisisandthedevastationitbroughttothepropertymarket.However,planshavebeenputintoplacetoturnthestatecapitalintoaworld-classcityoverthenextfewyears.

Exciting things are on the horizon and the sale of upcoming properties has been a hot topic for domestic and regional investors, for instance Medini Iskandar, which is the central business district of Nusajaya, Johor. Though it is only a portion of the Iskandar region, Medini has seen local firms team up with regional heavyweights to turn the area into a mixed development hub over the next five years. In February this year, Prime Minister Datuk Seri Najib Tun Razak and Singapore Prime Minister Lee Hsien Loong launched the Afiniti Medini and Avira in Medini, which are urban wellness and resort wellness projects respectively. The Gross Development Value (GDV) of these two projects—which will feature a wellness centre, serviced residences, corporate training centre, and commercial, retail and residential spaces—is set to be at least RM5.2 billion. This wellness-focused development is being undertaken by

Pulau Indah Ventures (PIV), which is a joint Malaysia-Singapore venture between the investment arm of both nations' governments—Khazanah Nasional Bhd and Temasek Holdings (Pte) Ltd (Temasek). The change in Johor Bahru will also usher in a new wave of learning in Johor, with several educational institutions choosing the Medini region as their new hub. The new area is known as EduCity, and it encompasses an area of 305 acres near Medini. Newcastle University, Medicine Malaysia (NUMed),

the University of Southampton's Malaysia Campus, Marlborough College Malaysia, Netherlands Maritime Institute of Technology, University of Reading Malaysia Campus, Raffles University Iskandar, and the Raffles American School are some of the big names that are set to underpin the educational diversity at EduCity. Accompanying the arrival of these institutions are the setting up of service apartments and budget hotels, the conversion of old heritage buildings in Bukit Timbalan into boutique hotels and a massive cleanup of the streets. What was previously the site of a prison will be redeveloped into cafes, hotels, and boutique retail outlets. In the midst of these attractions,

there will be a new RM465 million-ringgit Pinewood Iskandar Malaysia Studios—these are new film and television studios—situated near the tourist attractions of Legoland and Hello Kitty Town. The nearby man-made island at Danga Bay is a strategic play by Iskandar Waterfront Holdings Sdn Bhd (IWH) to add to the building possibilities—and the expected GDV of several billion ringgit will enhance the range of properties and attractions here. IWH, CapitaLand Malaysia Pte Ltd, and Temasek have teamed up to jointly-acquire and develop parcels of land here and in the region, with a RM8.1 billion mixed integrated development in the works. Over 1,600ha

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Business Advocate

of prime waterfront land will be developed into a waterfront city fronting Singapore over several years, including the 800ha Danga Bay, alongside other plots of land in Johor Bahru city centre, the Tebrau coast, and Desaru. Over half of the land in Danga Bay is reclaimed and the Bay will feature a cruise ship terminal, marina, fisherman's wharf, tower blocks to house commercial offices, hotels, exhibition and

convention centres, and residential properties. Bringing back the focus to the city centre, the Johor state government has requested for tenders in order to carry out beautification projects in the central business district of Johor Bahru city. The government will also focus on cleaning up the rivers in the vicinity. For example, one clean-up project of note involves Sungai Segget, which has a particularly notorious

reputation for being a dirty river. The project will involve cleaning up and reclaiming the river, which runs along Jalan Wong Ah Fook in downtown Johor Bahru, making it the centrepiece of the transformation project. IWH will also tackle the Johor Bahru Old Bridge, redevelop shophouses in Jalan Ibrahim, and establish transit-oriented developments centred on the Kotaraya Bus Terminal site.

IWH, which is co-owned by Tan Sri Lim and Kumpulan Prasarana Rakyat Johor, is expected to list on the KLSE in June in order to raise over RM930 million for the master developer, but some estimates place the valuation at close to RM5 billion instead. Should that succeed, we can expect more developments to the Johor Bahru skyline, which will be most welcomed by locals and foreigners alike.

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