Wow ,why Ada Height got higer inflation than other part of JB ? or something else is happening that we are not aware of?
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Economic News
- Thread starter FHBH12
- Start date
Wow ,why Ada Height got higer inflation than other part of JB ? or something else is happening that we are not aware of?
New Jusco to be built at BDO lor.......
Tebrau is playing the catching up game now. The traffic could be better in 2015-2016 when more lanes are open at Singapore side and the roads/bridges (e.g. Pasir Gudang Highway and Pandan bridge) are further improved.
Wow havent built already price inflation a few hundred Ks .. siao si boh ? They should go around building many many Jusco .
Huawei is the first to enter Iskandar. More to come?
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Iskandar hub for data centre
NUSAJAYA: Iskandar Malaysia has been earmarked for the establishment of a second hub for data centre parks in the country under the Entry Point Project 3 (EPP3) of the Economic Transformation Programme (ETP).
Multimedia Development Corp Sdn Bhd (MDeC) chief executive officer Datuk Badlisham Ghazali said that Iskandar Malaysia’s ecosystem was conducive to attract data centre service providers to set up their operations in the economic corridor.
“Iskandar Malaysia’s close proximity with Singapore is also an added advantage,’’ he told a press conference.
Badlisham said this at the annual Southeast Asia Data Centre and Cloud Congress that was attended by data service providers from Malaysia, Singapore, Indonesia, Thailand and Vietnam.
Under the EPP3, Malaysia aims to achieve RM786mil in revenue in 2014, RM7bil in private investments and RM2.46bil gross national income contribution by 2020 respectively.
Badlisham said at least half of 23 data centre service providers currently in the Klang Valley region were keen to expand their services to Iskandar Malaysia.
He said they covered the entire spectrum of data centre services – cloud, business continuity, managed services, hosting and co-location, and wholesale space/facilities leasing.
“It only makes sense for these players from all over the world to consider setting up their facilities in Iskandar Malaysia in view of the progress and development taking place in the economic growth corridor,’’ he said.
Badlisham said that in the data centre services industry, players normally would expand their services to other parts of the respective country or the region.
Iskandar Regional Development Authority (Irda) head of economic and investment Engku Ahmad Kamel Engku Taib said that with more investors coming to Iskandar Malaysia, they would need data-related services to support their activities.
“Irda will help to facilitate players who are interested to set up their operations and we are working closely with MDeC to attract data service providers from all over the world,’’ he added.
Engku Ahmad Kamel said the ICT and creative industry was one of the nine key economic sectors being promoted by Irda to transform Iskandar Malaysia into an international metropolis by 2025.
Others are electrical and electronics, petrochemical and oleochemical, food and agro-processing, logistic and related services, tourism, health, education and financial services.
-The Star 27 Mar 2014-
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Iskandar hub for data centre
NUSAJAYA: Iskandar Malaysia has been earmarked for the establishment of a second hub for data centre parks in the country under the Entry Point Project 3 (EPP3) of the Economic Transformation Programme (ETP).
Multimedia Development Corp Sdn Bhd (MDeC) chief executive officer Datuk Badlisham Ghazali said that Iskandar Malaysia’s ecosystem was conducive to attract data centre service providers to set up their operations in the economic corridor.
“Iskandar Malaysia’s close proximity with Singapore is also an added advantage,’’ he told a press conference.
Badlisham said this at the annual Southeast Asia Data Centre and Cloud Congress that was attended by data service providers from Malaysia, Singapore, Indonesia, Thailand and Vietnam.
Under the EPP3, Malaysia aims to achieve RM786mil in revenue in 2014, RM7bil in private investments and RM2.46bil gross national income contribution by 2020 respectively.
Badlisham said at least half of 23 data centre service providers currently in the Klang Valley region were keen to expand their services to Iskandar Malaysia.
He said they covered the entire spectrum of data centre services – cloud, business continuity, managed services, hosting and co-location, and wholesale space/facilities leasing.
“It only makes sense for these players from all over the world to consider setting up their facilities in Iskandar Malaysia in view of the progress and development taking place in the economic growth corridor,’’ he said.
Badlisham said that in the data centre services industry, players normally would expand their services to other parts of the respective country or the region.
Iskandar Regional Development Authority (Irda) head of economic and investment Engku Ahmad Kamel Engku Taib said that with more investors coming to Iskandar Malaysia, they would need data-related services to support their activities.
“Irda will help to facilitate players who are interested to set up their operations and we are working closely with MDeC to attract data service providers from all over the world,’’ he added.
Engku Ahmad Kamel said the ICT and creative industry was one of the nine key economic sectors being promoted by Irda to transform Iskandar Malaysia into an international metropolis by 2025.
Others are electrical and electronics, petrochemical and oleochemical, food and agro-processing, logistic and related services, tourism, health, education and financial services.
-The Star 27 Mar 2014-
i think the sales agents just realized the asking prices for subsale adda heights were relatively low compared to others in the vicinity (ie eco spring and SEC cluster is > 1m ) and also AH grey stone clusters have sold out by now.
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Wow havent built already price inflation a few hundred Ks .. siao si boh ? They should go around building many many Jusco .
as i explained earlier, AH subsale were asking 900k a few months ago. while pricing of new cluster by sec, eco spring , > 1m. a Adda height have sold out their grey stone cluster. next launch should be 1M already. so sales agents must have advised their clients to re-align asking prices to 1.1, 1.2 M.
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Is the Malaysian goods and services tax regressive?
BY DATO SRI KHAZALI AHMAD
Published: Monday April 7, 2014 MYT 12:00:00 AM
Updated: Monday April 7, 2014 MYT 9:58:37 AM
A broad-based tax, such as goods and services tax, is generally considered to be a regressive tax. Before we go further, let us look at what regressive actually means.
In simple terms, a regressive tax imposes a greater burden (relative to resources) on the poor than on the rich — there is an inverse relationship between the tax rate and the taxpayer’s ability to pay as measured by assets, consumption or income.
Any consumption taxes, including the Goods and Services Tax (GST), is generally regarded as regressive because the poorer households spend a greater proportion of their income on consumption compared to higher income households.
The issue of regressive nature of any consumption tax is often a serious concern to policy-makers.
Despite its regressive nature, GST, or better known as VAT (Value-Added Tax), has been introduced in more than 160 countries in the world.
Experience of other countries
Over the years, many developed countries such as the UK, Australia, Germany and Spain have experienced a regressive nature of VAT amongst the lower, middle and higher income groups. The reason for this is the minimal zero rating of basic essentials and exemptions that have been practised by these countries when implementing the VAT.
For example, a study conducted on the distributional impact of the VAT/indirect tax package in Australia showed that the VAT impact was equivalent to a burden of 4.4% of income for the bottom 20% of households compared to 1.4% of income for the top 20% of households.
The result was the same for Japan, Colombia and Peru as the VAT was found to be regressive, with little effect from exemptions.
On the other hand, several developing countries such as Vietnam and Ethiopia have experienced progressive VAT as they adopted the zero rating of basic essentials and exemptions when implementing the VAT.
In Pakistan too, the VAT was found to be progressive owing to exemptions (especially of in-kind consumption)
Is Malaysian GST Really Regressive?
The introduction of a GST often raises the concern that it is a regressive tax, meaning that the tax represents a higher burden for lower-income households.
“A broad-based consumption tax, such as a value added tax or GST, is generally considered to be a regressive tax.
“This conclusion, however, has not taken into account the fact that in developing countries, the commodities on which poor households spend most of their income, is not taxed. When this factor is considered, VAT can be naturally progressive” .
In Malaysia, GST should not be considered in isolation to the taxes that it is replacing which may be equally (or more) regressive. In addition, GST tends to have multiple rates which are justified for equity reasons in developing countries on the grounds that social safety nets are typically not as well-developed as in high income countries.
As a result, “essential” goods such as basic food, piped water and the first 200 units of electricity consumption to domestic consumers are zero-rated under the Malaysia’s GST.
To further lessen the GST impact on the poor, services such as health, housing, public transport and education are treated as GST exempt.
Apart from not taxing necessities, by setting the GST threshold at a level where small businesses are excluded to account for the tax, the low-income households are somewhat free from the burden of GST.
The reason being, low income households tend to purchase a larger proportion of goods and services from the small retail sector in the rural areas where the goods are either not taxed at all, or are more lightly taxed.
However, the higher income households purchase goods and services in retail outlets in the urban areas that are likely to fully comply with the tax rules.
As a result, the share of consumption subject to GST for higher income households tends to be greater than that for the poor.
Lately, we have seen many articles which basically criticised Malaysia’s model of GST as being regressive.
Notably, some critics have made presumptions that the poor will be taxed higher than the rich, an income earner of less than RM2,000 would now have to pay taxes in the form of the GST where it is going to eat into his household debts and the assumption of the gross domestic product (GDP) to fall in 2014.
The question is, is this true?
Many of these articles grossly ignored to discount the effect of SST (sales and services tax) that would be abolished when GST is introduced. Some critics who consider GST to be a regressive tax do not study the expenditure pattern of the various income groups.
Why Malaysian GST is progressive
The Royal Malaysian Customs and the Finance Ministry have done extensive research on the GST. A recent study shows that Malaysia’s model is indeed progressive.
Based on the data compiled from the tables shown above, the tax burden as percentage to expenditure for a household income of RM2,000 is only 2.59% whereas for a household income of RM12,000 is 4.14%.
The tax incidence at GST 6% on expenditure subject to GST for a household income of RM2,000 per month is only RM39.16 but for a household income of RM12,000 is RM345.06/month which is almost nine times greater.
The tax incidence would be much lower if we discount the sales tax and service tax factor for which they are currently already paying.
A household income of RM2,000 spends about 32% of his total expenditure on zero-rated item and 32.63% on items subject to GST where else a household income of RM12,000 spends only about 12.15% of his total expenditure on zero-rated item and 63.90% on items subject to GST.
GST is a consumption tax. It is based on spending. If the spending is higher, then tax charged will be more.
Low- and middle-income earners are unlikely to spend more on non-basic items that are not GST zero rated or exempted. Even if they did, the volume is not as high as wealthy people as their purchasing power is limited.
It is usually the wealthy ones who spend more on luxuries.
Despite the many unfavorable aspects of GST, the Malaysian GST model is designed to be a progressive one. It lessens the impact on the rakyat and at the same time overcome the inherent weakness of SST.
Even though the Malaysian Model is a progressive one, the Government has designed a compensation package to offset any additional tax burden that might affect the low income Rakyat when GST is implemented.
The offset package includes;
1. RM300 one-off cash to BR1M recipients as household assistance.
2. Individual income tax rates reduced by 1% to 3% to increase their disposable income – 300,000 tax payers will no longer pay tax.
3. Families of RM4,000 household income will no longer pay tax.
4. Cash assistance under the BRIM is increased from RM500 to RM650 in 2014 and to increase it further in 2015
5. Chargeable income subject to the maximum rate of exceeding RM100,000 will be increasing to exceeding RM400,000. Current maximum tax rate of 26% will be reduced to 24%, 24.5% and 25%.
Conclusion
In Malaysia’s case, the overriding rationale to introduce the GST is to modernise our tax system and to overcome the inefficiency of the indirect tax system in the country. Moreover, GST also provides the opportunity to enhance fiscal sustainability.
From the studies done by the MoF and Customs, it is evident that zero-rating of basic food, water and electricity(up to a certain level) and exempting the critical sectors such as housing, public transportation, health, education, land and financial services including life insurance, has made the Malaysian model a progressive one rather than a regressive one.
This is due to the fact that the Government is not taxing or taxing very lightly on goods and services on which poor households spend most of their income.
The writer is the Director General of Customs, Malaysia.
http://www.thestar.com.my/Business/...e-the-inefficiency-of-the-indirect-tax-syste/
BY DATO SRI KHAZALI AHMAD
Published: Monday April 7, 2014 MYT 12:00:00 AM
Updated: Monday April 7, 2014 MYT 9:58:37 AM
A broad-based tax, such as goods and services tax, is generally considered to be a regressive tax. Before we go further, let us look at what regressive actually means.
In simple terms, a regressive tax imposes a greater burden (relative to resources) on the poor than on the rich — there is an inverse relationship between the tax rate and the taxpayer’s ability to pay as measured by assets, consumption or income.
Any consumption taxes, including the Goods and Services Tax (GST), is generally regarded as regressive because the poorer households spend a greater proportion of their income on consumption compared to higher income households.
The issue of regressive nature of any consumption tax is often a serious concern to policy-makers.
Despite its regressive nature, GST, or better known as VAT (Value-Added Tax), has been introduced in more than 160 countries in the world.
Experience of other countries
Over the years, many developed countries such as the UK, Australia, Germany and Spain have experienced a regressive nature of VAT amongst the lower, middle and higher income groups. The reason for this is the minimal zero rating of basic essentials and exemptions that have been practised by these countries when implementing the VAT.
For example, a study conducted on the distributional impact of the VAT/indirect tax package in Australia showed that the VAT impact was equivalent to a burden of 4.4% of income for the bottom 20% of households compared to 1.4% of income for the top 20% of households.
The result was the same for Japan, Colombia and Peru as the VAT was found to be regressive, with little effect from exemptions.
On the other hand, several developing countries such as Vietnam and Ethiopia have experienced progressive VAT as they adopted the zero rating of basic essentials and exemptions when implementing the VAT.
In Pakistan too, the VAT was found to be progressive owing to exemptions (especially of in-kind consumption)
Is Malaysian GST Really Regressive?
The introduction of a GST often raises the concern that it is a regressive tax, meaning that the tax represents a higher burden for lower-income households.
“A broad-based consumption tax, such as a value added tax or GST, is generally considered to be a regressive tax.
“This conclusion, however, has not taken into account the fact that in developing countries, the commodities on which poor households spend most of their income, is not taxed. When this factor is considered, VAT can be naturally progressive” .
In Malaysia, GST should not be considered in isolation to the taxes that it is replacing which may be equally (or more) regressive. In addition, GST tends to have multiple rates which are justified for equity reasons in developing countries on the grounds that social safety nets are typically not as well-developed as in high income countries.
As a result, “essential” goods such as basic food, piped water and the first 200 units of electricity consumption to domestic consumers are zero-rated under the Malaysia’s GST.
To further lessen the GST impact on the poor, services such as health, housing, public transport and education are treated as GST exempt.
Apart from not taxing necessities, by setting the GST threshold at a level where small businesses are excluded to account for the tax, the low-income households are somewhat free from the burden of GST.
The reason being, low income households tend to purchase a larger proportion of goods and services from the small retail sector in the rural areas where the goods are either not taxed at all, or are more lightly taxed.
However, the higher income households purchase goods and services in retail outlets in the urban areas that are likely to fully comply with the tax rules.
As a result, the share of consumption subject to GST for higher income households tends to be greater than that for the poor.
Lately, we have seen many articles which basically criticised Malaysia’s model of GST as being regressive.
Notably, some critics have made presumptions that the poor will be taxed higher than the rich, an income earner of less than RM2,000 would now have to pay taxes in the form of the GST where it is going to eat into his household debts and the assumption of the gross domestic product (GDP) to fall in 2014.
The question is, is this true?
Many of these articles grossly ignored to discount the effect of SST (sales and services tax) that would be abolished when GST is introduced. Some critics who consider GST to be a regressive tax do not study the expenditure pattern of the various income groups.
Why Malaysian GST is progressive
The Royal Malaysian Customs and the Finance Ministry have done extensive research on the GST. A recent study shows that Malaysia’s model is indeed progressive.
Based on the data compiled from the tables shown above, the tax burden as percentage to expenditure for a household income of RM2,000 is only 2.59% whereas for a household income of RM12,000 is 4.14%.
The tax incidence at GST 6% on expenditure subject to GST for a household income of RM2,000 per month is only RM39.16 but for a household income of RM12,000 is RM345.06/month which is almost nine times greater.
The tax incidence would be much lower if we discount the sales tax and service tax factor for which they are currently already paying.
A household income of RM2,000 spends about 32% of his total expenditure on zero-rated item and 32.63% on items subject to GST where else a household income of RM12,000 spends only about 12.15% of his total expenditure on zero-rated item and 63.90% on items subject to GST.
GST is a consumption tax. It is based on spending. If the spending is higher, then tax charged will be more.
Low- and middle-income earners are unlikely to spend more on non-basic items that are not GST zero rated or exempted. Even if they did, the volume is not as high as wealthy people as their purchasing power is limited.
It is usually the wealthy ones who spend more on luxuries.
Despite the many unfavorable aspects of GST, the Malaysian GST model is designed to be a progressive one. It lessens the impact on the rakyat and at the same time overcome the inherent weakness of SST.
Even though the Malaysian Model is a progressive one, the Government has designed a compensation package to offset any additional tax burden that might affect the low income Rakyat when GST is implemented.
The offset package includes;
1. RM300 one-off cash to BR1M recipients as household assistance.
2. Individual income tax rates reduced by 1% to 3% to increase their disposable income – 300,000 tax payers will no longer pay tax.
3. Families of RM4,000 household income will no longer pay tax.
4. Cash assistance under the BRIM is increased from RM500 to RM650 in 2014 and to increase it further in 2015
5. Chargeable income subject to the maximum rate of exceeding RM100,000 will be increasing to exceeding RM400,000. Current maximum tax rate of 26% will be reduced to 24%, 24.5% and 25%.
Conclusion
In Malaysia’s case, the overriding rationale to introduce the GST is to modernise our tax system and to overcome the inefficiency of the indirect tax system in the country. Moreover, GST also provides the opportunity to enhance fiscal sustainability.
From the studies done by the MoF and Customs, it is evident that zero-rating of basic food, water and electricity(up to a certain level) and exempting the critical sectors such as housing, public transportation, health, education, land and financial services including life insurance, has made the Malaysian model a progressive one rather than a regressive one.
This is due to the fact that the Government is not taxing or taxing very lightly on goods and services on which poor households spend most of their income.
The writer is the Director General of Customs, Malaysia.
http://www.thestar.com.my/Business/...e-the-inefficiency-of-the-indirect-tax-syste/
GST BILL 2014 PASSED BY LOWER HOUSE MALAYSIAN PARLIAMENT
APRIL 7, 2014
The Goods and Services Tax ("GST") Bill 2014 was tabled for its first reading in the Malaysian Parliament on 31 March 2014 and was passed by the Dewan Rakyat (lower house of the Malaysian Parliament) on 7 April 2014. The GST Bill 2014 will now proceed through the Dewan Negara (upper house of the Malaysian Parliament) before it can be gazetted into law.
The passing of the GST Bill 2014 is to facilitate the implementation of a GST regime in Malaysia with the implementation date scheduled to be 1 April 2015.
Overview of the Proposed GST Regime
The Royal Customs of Malaysia ("Customs") will be the authority responsible for the implementation and administration of GST. In preparation for the implementation of GST, Customs has been issuing draft guidelines and continues to update such draft guidelines relating to the GST regime.
GST will be levied and charged at 6% on the taxable supply of goods and services made by a taxable person in the course or furtherance of business in Malaysia. GST will also be charged and levied on imported goods and services into Malaysia.
Generally, businesses will charge GST on the output of taxable goods or services (“output tax”), but are allowed to claim as credit any GST incurred on their purchases (“input tax”). However, where the supply is regarded as an exempt supply, no input tax credits can be claimed. Where a person's output tax exceeds his input tax, the difference must be remitted to Customs. Conversely, where his input tax exceeds his output tax, a claim for refund can be made to Customs.
Registration for GST purposes is mandatory for any person who makes a taxable supply for business purposes and where the annual taxable turnover of such supply exceeds the prescribed threshold. The threshold is proposed to be fixed at RM 500,000. Businesses will need to be registered in order to charge GST and claim input tax credits. Businesses below the mandatory registration threshold of RM 500,000 annual turnover may still voluntarily apply to be registered for GST.
Transitional Rules
From the date GST comes into force, the sales tax and service tax legislation will be repealed. The facilities and exemptions given under Sales Tax Act 1972 and Service Tax Act 1975 will cease to be effective, save for certain provisions for the enforcement of obligations such as the levying, payment, assessment, remission, or recovery of sales tax or service tax which has become due and payable and also provision for refund of such taxes which were overpaid or erroneously paid.
There are transitional rules and provisions governing the transition from the existing sales and service tax regime into the GST regime. Some of the rules are as follows:
- Non-Reviewable Contracts: GST will be applicable to any supplies made on or after 1 April 2015. However, non-reviewable contracts entered into within 2 years prior to 1 April 2015 can be zero-rated for a period of 5 years;
- Repeal of Service Tax: No service tax will apply on or after 1 April 2015 and certain steps must be taken to ensure all returns are submitted and all service tax payable is accounted for on the last taxable period prior to 1 April 2015;
- Repeal of Sales Tax: No sales tax will apply on or after 1 April 2015, and certain steps must be taken to ensure all returns are submitted and all sales tax payable is accounted for on the last taxable period prior to 1 April 2015; and
- Special Refund Rules: To eliminate the incidence of double taxation, the GST Bill 2014 provides for a special refund of sales tax in respect of the goods held on hand on 1 April 2015. The special refund will only be available if prescribed conditions are met.
Preparing for GST's Implementation
The transitional period of approximately 11 months is a crucial period for businesses to begin necessary preparations including implementing relevant systems and software for GST compliance, training of staff and tailoring computer systems to implement the GST to suit the profile of the business and nature of the operations.
The GST implications for long-term contracts and contracts spanning the implementation of GST will need to be analysed and considered. The review is important to determine the allocation of the GST burden and the treatment of contracts spanning the implementation of GST. Review from a legal perspective of the clauses of existing long-term contracts as well as consideration of the relevant transitional rules will need to be undertaken to assist businesses in assessing the GST impact on such long-term contracts.
All accounting and recording systems should be updated to allow for the calculation of output tax and input tax claims. Cash flow statements prepared by finance departments should also recognise that output tax may have to be paid to Customs even before sales invoices are settled. Businesses should aim to maximise their input tax credits and expend their best efforts to track and capture supplier’s invoices promptly to minimise cash outflow.
http://www.amcham.com.my/index.php/...ouse-of-the-malaysian-parliament-april-7-2014
APRIL 7, 2014
The Goods and Services Tax ("GST") Bill 2014 was tabled for its first reading in the Malaysian Parliament on 31 March 2014 and was passed by the Dewan Rakyat (lower house of the Malaysian Parliament) on 7 April 2014. The GST Bill 2014 will now proceed through the Dewan Negara (upper house of the Malaysian Parliament) before it can be gazetted into law.
The passing of the GST Bill 2014 is to facilitate the implementation of a GST regime in Malaysia with the implementation date scheduled to be 1 April 2015.
Overview of the Proposed GST Regime
The Royal Customs of Malaysia ("Customs") will be the authority responsible for the implementation and administration of GST. In preparation for the implementation of GST, Customs has been issuing draft guidelines and continues to update such draft guidelines relating to the GST regime.
GST will be levied and charged at 6% on the taxable supply of goods and services made by a taxable person in the course or furtherance of business in Malaysia. GST will also be charged and levied on imported goods and services into Malaysia.
Generally, businesses will charge GST on the output of taxable goods or services (“output tax”), but are allowed to claim as credit any GST incurred on their purchases (“input tax”). However, where the supply is regarded as an exempt supply, no input tax credits can be claimed. Where a person's output tax exceeds his input tax, the difference must be remitted to Customs. Conversely, where his input tax exceeds his output tax, a claim for refund can be made to Customs.
Registration for GST purposes is mandatory for any person who makes a taxable supply for business purposes and where the annual taxable turnover of such supply exceeds the prescribed threshold. The threshold is proposed to be fixed at RM 500,000. Businesses will need to be registered in order to charge GST and claim input tax credits. Businesses below the mandatory registration threshold of RM 500,000 annual turnover may still voluntarily apply to be registered for GST.
Transitional Rules
From the date GST comes into force, the sales tax and service tax legislation will be repealed. The facilities and exemptions given under Sales Tax Act 1972 and Service Tax Act 1975 will cease to be effective, save for certain provisions for the enforcement of obligations such as the levying, payment, assessment, remission, or recovery of sales tax or service tax which has become due and payable and also provision for refund of such taxes which were overpaid or erroneously paid.
There are transitional rules and provisions governing the transition from the existing sales and service tax regime into the GST regime. Some of the rules are as follows:
- Non-Reviewable Contracts: GST will be applicable to any supplies made on or after 1 April 2015. However, non-reviewable contracts entered into within 2 years prior to 1 April 2015 can be zero-rated for a period of 5 years;
- Repeal of Service Tax: No service tax will apply on or after 1 April 2015 and certain steps must be taken to ensure all returns are submitted and all service tax payable is accounted for on the last taxable period prior to 1 April 2015;
- Repeal of Sales Tax: No sales tax will apply on or after 1 April 2015, and certain steps must be taken to ensure all returns are submitted and all sales tax payable is accounted for on the last taxable period prior to 1 April 2015; and
- Special Refund Rules: To eliminate the incidence of double taxation, the GST Bill 2014 provides for a special refund of sales tax in respect of the goods held on hand on 1 April 2015. The special refund will only be available if prescribed conditions are met.
Preparing for GST's Implementation
The transitional period of approximately 11 months is a crucial period for businesses to begin necessary preparations including implementing relevant systems and software for GST compliance, training of staff and tailoring computer systems to implement the GST to suit the profile of the business and nature of the operations.
The GST implications for long-term contracts and contracts spanning the implementation of GST will need to be analysed and considered. The review is important to determine the allocation of the GST burden and the treatment of contracts spanning the implementation of GST. Review from a legal perspective of the clauses of existing long-term contracts as well as consideration of the relevant transitional rules will need to be undertaken to assist businesses in assessing the GST impact on such long-term contracts.
All accounting and recording systems should be updated to allow for the calculation of output tax and input tax claims. Cash flow statements prepared by finance departments should also recognise that output tax may have to be paid to Customs even before sales invoices are settled. Businesses should aim to maximise their input tax credits and expend their best efforts to track and capture supplier’s invoices promptly to minimise cash outflow.
http://www.amcham.com.my/index.php/...ouse-of-the-malaysian-parliament-april-7-2014
Share GST earnings from Sabah, Putrajaya told
Ng Suzhen
April 10, 2014
Likas assemblyman Junz Wong will move a motion in the Sabah Legislative Assembly today to demand that 50% of GST collected in the state be channelled back.
KOTA KINABALU: Now that the Goods and Services Tax (GST) Bill has been passed in Parliament, Likas assemblyman Junz Wong is looking for “alternative” ways to buffer Sabahans from its impact.
GST will take effect in 2015.
Wong will be tabling a motion in the State Legislative Assembly today to demand that the Federal Government return to Sabah 50% of the relevant taxes collected from the state.
Wong estimates that the federal government will collect about RM2 billion in GST from Sabah once the system is implemented next year.
“Malaysia is not ready for GST but since the bill has been passed in Parliament, it’s pointless to fight it anymore.
“The next best move (now) would be to find an alternative to further improve the life of Sabahans,” said Wong.
Sabah, being the poorest state in Malaysia has always incurred a ridiculously high amount of living expenses which is not compatible with their earnings, he said.
“Most of our raw materials are imported and the general public are the ones getting the brunt of the high prices.
“The common man struggles to keep up with the high rising price on goods as they earn an unreasonably low income,” said Wong, who is also DAP Sabah Organising Secretary.
He said this was because it is hard for the general public to involve themselves in import business due to monopolistic policies.
Devastating chain effect
Wong also described as a failure the Price Uniformity Scheme by the federal government, which allocated RM386 million to close the gap of prices in Sabah and Sarawak.
“Living expenses continue to be high as the scheme does not seem to impact the lives of the people.
“If nothing is being done, the accumulative chain effect from the GST would further devastate the people’s living.
“With GST, Sabahans would be paying more tax than any Malaysians outside of Sabah because our goods are more expensive than theirs.
“It’s a policy that will only further discriminate and marginalise Sabahans,” he said.
On Tuesday in an immediate reaction to the passing of the GST Bill, Wong lamented that housing would now be inaccessible to the younger generation.
He said already houses in Sabah were overpriced .
“With GST, Sabahans would be paying more tax than any Malaysians outside Sabah because our goods in general are more expensive.
“The implementation of GST will cause a chain reaction to the prices of houses.
“Land developers and suppliers will be taxed on land, raw materials and transportation, causing less profit for the related players.
“House buyers will bear the burden of the end cost, which will also be taxed,” he said.
Also Read:
GST Bill passed http://www.fmtborneoplus.com/category/nation/2014/04/08/gst-bill-passed/
Ng Suzhen
April 10, 2014
Likas assemblyman Junz Wong will move a motion in the Sabah Legislative Assembly today to demand that 50% of GST collected in the state be channelled back.
KOTA KINABALU: Now that the Goods and Services Tax (GST) Bill has been passed in Parliament, Likas assemblyman Junz Wong is looking for “alternative” ways to buffer Sabahans from its impact.
GST will take effect in 2015.
Wong will be tabling a motion in the State Legislative Assembly today to demand that the Federal Government return to Sabah 50% of the relevant taxes collected from the state.
Wong estimates that the federal government will collect about RM2 billion in GST from Sabah once the system is implemented next year.
“Malaysia is not ready for GST but since the bill has been passed in Parliament, it’s pointless to fight it anymore.
“The next best move (now) would be to find an alternative to further improve the life of Sabahans,” said Wong.
Sabah, being the poorest state in Malaysia has always incurred a ridiculously high amount of living expenses which is not compatible with their earnings, he said.
“Most of our raw materials are imported and the general public are the ones getting the brunt of the high prices.
“The common man struggles to keep up with the high rising price on goods as they earn an unreasonably low income,” said Wong, who is also DAP Sabah Organising Secretary.
He said this was because it is hard for the general public to involve themselves in import business due to monopolistic policies.
Devastating chain effect
Wong also described as a failure the Price Uniformity Scheme by the federal government, which allocated RM386 million to close the gap of prices in Sabah and Sarawak.
“Living expenses continue to be high as the scheme does not seem to impact the lives of the people.
“If nothing is being done, the accumulative chain effect from the GST would further devastate the people’s living.
“With GST, Sabahans would be paying more tax than any Malaysians outside of Sabah because our goods are more expensive than theirs.
“It’s a policy that will only further discriminate and marginalise Sabahans,” he said.
On Tuesday in an immediate reaction to the passing of the GST Bill, Wong lamented that housing would now be inaccessible to the younger generation.
He said already houses in Sabah were overpriced .
“With GST, Sabahans would be paying more tax than any Malaysians outside Sabah because our goods in general are more expensive.
“The implementation of GST will cause a chain reaction to the prices of houses.
“Land developers and suppliers will be taxed on land, raw materials and transportation, causing less profit for the related players.
“House buyers will bear the burden of the end cost, which will also be taxed,” he said.
Also Read:
GST Bill passed http://www.fmtborneoplus.com/category/nation/2014/04/08/gst-bill-passed/
NO IT IS NOT. at least now everyone pay based on consumption. NAJIB, u da man!
Last edited:
Thousands show concern over Malaysia's new tax
The Nation/Asia News Network
Friday, May 02, 2014
KUALA LUMPUR - The anti-Goods and Services Tax (GST) rally ended prematurely as rain descended upon Dataran Merdeka where a massive crowd had gathered.
The rally, held in protest against the Federal Government, went on peacefully with no untoward incident except for a few scuffles between people wearing the Solidariti Anak Muda Malaysia (SAMM) T-shirts and PAS Unit Amal volunteers.
Protesters gathered at eight different meeting points in the city as early as 7am yesterday to take part in the rally against the new tax, scheduled to be implemented next year.
More than 12 buses and trucks filled with policemen were deployed and they managed to maintain order as people started to march to Data-ran Merdeka at 2pm.
The protesters ignored police orders by bringing children to the rally while some shouted slogans including Tolak Reformasi, Bangkit (rise) and Reformasi (reformation).
Early on, the crowd at Sogo shopping complex were impatient and started marching when Pakatan leaders were giving speeches.
"Save your speeches, we just want to march," one of the supporters said.
When the congregation reached Dataran Merdeka at 1pm, they were told to turn back by Unit Amal personnel as protesters were only allowed along Jalan Raja between 2pm and 5pm.
http://news.asiaone.com/news/malaysia/thousands-show-concern-over-malaysias-new-tax
The Nation/Asia News Network
Friday, May 02, 2014
KUALA LUMPUR - The anti-Goods and Services Tax (GST) rally ended prematurely as rain descended upon Dataran Merdeka where a massive crowd had gathered.
The rally, held in protest against the Federal Government, went on peacefully with no untoward incident except for a few scuffles between people wearing the Solidariti Anak Muda Malaysia (SAMM) T-shirts and PAS Unit Amal volunteers.
Protesters gathered at eight different meeting points in the city as early as 7am yesterday to take part in the rally against the new tax, scheduled to be implemented next year.
More than 12 buses and trucks filled with policemen were deployed and they managed to maintain order as people started to march to Data-ran Merdeka at 2pm.
The protesters ignored police orders by bringing children to the rally while some shouted slogans including Tolak Reformasi, Bangkit (rise) and Reformasi (reformation).
Early on, the crowd at Sogo shopping complex were impatient and started marching when Pakatan leaders were giving speeches.
"Save your speeches, we just want to march," one of the supporters said.
When the congregation reached Dataran Merdeka at 1pm, they were told to turn back by Unit Amal personnel as protesters were only allowed along Jalan Raja between 2pm and 5pm.
http://news.asiaone.com/news/malaysia/thousands-show-concern-over-malaysias-new-tax
Holiday sees fewer Chinese go to Malaysia
By Zheng Xin
China Daily/Asia News Network | Mon, May 5 2014
The disappearance of Malaysia Airlines Flight MH370 has led to a decline in the number of Chinese tourists to Malaysia during the May Day holiday, the China National Tourism Administration said.
Many travel agencies have changed the once popular "Singapore-Malaysia-Thailand" itinerary to a "Singapore-Vietnam-Thailand" one due to the negative impression of the Southeast Asian country from the Flight MH370 incident, the administration said.
It did not provide figures or further details but said many travel companies have also cancelled group trips to Malaysia.
Flight MH370 vanished on March 8 en route from Kuala Lumpur to Beijing. The Boeing 777 had 239 people on board, including 154 Chinese passengers. A multinational search for the plane in the southern Indian Ocean has found no trace of the aircraft.
Members of the Chinese public and families of passengers on MH370 have criticised Malaysian authorities' handling of the incident, citing a lack of information and initial delays in providing it, among other issues.
Yang Jinsong, a China Tourism Academy professor, said the slowdown in Chinese travel will seriously hurt Malaysia's tourism industry and may continue for years.
"Chinese are one of the major groups of tourists for the country, and the negative impression will have serious consequences," he said.
"Some agencies have had to cancel group trips to Malaysia for fear of the negative sentiment."
Restoring Malaysia's image will take a long time, Yang said.
Wang Yujie, who was considering traveling to Malaysia this year with his family, said he no longer will consider going to "the destination of lies".
"I don't trust their airlines or the whole country anymore," Wang said. "Moreover, it's like going against everyone in the country if you travel there."
The Chinese tourism administration said the country's travel market experienced another boom during the May Day break over the weekend as many Chinese went on trips outside the mainland for a few days. Popular destinations included Taiwan, Hong Kong, South Korea, Bali and Japan.
Fujian, Hainan and Yunnan provinces were among the most favourite domestic destinations, and an increasing number of people made roadtrips with their cars, it said.
Beijing had 5.5 million visitors during the period, and Tianjin attracted 2 million tourists, a year-on-year increase of 16.4 per cent.
- See more at: http://www.relax.com.sg/article/news/holiday-sees-fewer-chinese-go-to-malaysia#sthash.xmMO69Ue.dpuf
By Zheng Xin
China Daily/Asia News Network | Mon, May 5 2014
The disappearance of Malaysia Airlines Flight MH370 has led to a decline in the number of Chinese tourists to Malaysia during the May Day holiday, the China National Tourism Administration said.
Many travel agencies have changed the once popular "Singapore-Malaysia-Thailand" itinerary to a "Singapore-Vietnam-Thailand" one due to the negative impression of the Southeast Asian country from the Flight MH370 incident, the administration said.
It did not provide figures or further details but said many travel companies have also cancelled group trips to Malaysia.
Flight MH370 vanished on March 8 en route from Kuala Lumpur to Beijing. The Boeing 777 had 239 people on board, including 154 Chinese passengers. A multinational search for the plane in the southern Indian Ocean has found no trace of the aircraft.
Members of the Chinese public and families of passengers on MH370 have criticised Malaysian authorities' handling of the incident, citing a lack of information and initial delays in providing it, among other issues.
Yang Jinsong, a China Tourism Academy professor, said the slowdown in Chinese travel will seriously hurt Malaysia's tourism industry and may continue for years.
"Chinese are one of the major groups of tourists for the country, and the negative impression will have serious consequences," he said.
"Some agencies have had to cancel group trips to Malaysia for fear of the negative sentiment."
Restoring Malaysia's image will take a long time, Yang said.
Wang Yujie, who was considering traveling to Malaysia this year with his family, said he no longer will consider going to "the destination of lies".
"I don't trust their airlines or the whole country anymore," Wang said. "Moreover, it's like going against everyone in the country if you travel there."
The Chinese tourism administration said the country's travel market experienced another boom during the May Day break over the weekend as many Chinese went on trips outside the mainland for a few days. Popular destinations included Taiwan, Hong Kong, South Korea, Bali and Japan.
Fujian, Hainan and Yunnan provinces were among the most favourite domestic destinations, and an increasing number of people made roadtrips with their cars, it said.
Beijing had 5.5 million visitors during the period, and Tianjin attracted 2 million tourists, a year-on-year increase of 16.4 per cent.
- See more at: http://www.relax.com.sg/article/news/holiday-sees-fewer-chinese-go-to-malaysia#sthash.xmMO69Ue.dpuf
Westports' Q1 earnings jump 38% to RM109m
Strong throughput growth signals that effect of P3 fallout may be mitigated
BY S JAYASANKARANIN KUALA LUMPUR
PUBLISHED MAY 06, 2014
WESTPORTS Holdings, Malaysia's second-largest port, has recorded a 38 per cent surge in net earnings to RM109.04 million (S$41.8 million) for its first quarter ended March 31, 2014.
The earnings, which were largely driven by strong throughput growth, are a barometer of the country's wider trade profile and reflect its generally strong net export recovery in the face of improving external demand. Both export and import growth have registered double-digit figures in the first quarter of the year.
Even so, the company, one of Malaysia's larger initial public offerings (IPOs) last year, has been something of a disappointment to its shareholders as its share price has largely underperformed the broader market.
The main reason for investor disaffection is the looming reality that the European-based P3 alliance, which includes Maersk, will no longer call on the port from later this year.
Westports has sought to downplay the news by pointing out that the diminution in cargo volumes would be less than 2 per cent of total throughput and would be more than mitigated by the overall growth in traffic.
Even so, the news appears to have cast a pall over the stock which has not gained much over its IPO price of RM2.50 a share. But it had begun climbing incrementally ahead of the results announcement last Friday and rose again yesterday by 0.4 per cent to RM2.55 apiece.
The company still has a sizeable institutional following because of its growth prospects. It is majority controlled (53 per cent) by the family of Malaysian tycoon G Gnanalingam while a unit owned by Hong Kong magnate Li Ka-shing holds more than 20 per cent.
In its announcement to the stock exchange, Westports said that its operational revenue rose 11.4 per cent to RM348.3 million, driven by growth in throughput which rose by almost 12 per cent to 1.93 million containers.
March also notched a "record" monthly volume of 693,000 containers, the company said, signalling that the effects of the P3 fallout could indeed be mitigated.
In a report yesterday, Maybank called a buy on the stock and estimated its fair value, on a discounted-cashflow basis, at RM2.70 a share.
The bank also seemed impressed by Westports' efficiency. "Despite higher electricity and fuel costs, its first-quarter earnings before interest, taxes, depreciation and amortisation (Ebitda) was maintained at 51 per cent due to operational efficiencies," it noted.
The bank agreed with the firm's view that growth would remain robust this year and the next, estimating that it would remain at least at 8 per cent a year. Given "a decent dividend yield of 4.2 per cent, we maintain our buy on the stock", Maybank said.
http://www.businesstimes.com.sg/premium/malaysia/westports-q1-earnings-jump-38-rm109m-20140506
Strong throughput growth signals that effect of P3 fallout may be mitigated
BY S JAYASANKARANIN KUALA LUMPUR
PUBLISHED MAY 06, 2014
WESTPORTS Holdings, Malaysia's second-largest port, has recorded a 38 per cent surge in net earnings to RM109.04 million (S$41.8 million) for its first quarter ended March 31, 2014.
The earnings, which were largely driven by strong throughput growth, are a barometer of the country's wider trade profile and reflect its generally strong net export recovery in the face of improving external demand. Both export and import growth have registered double-digit figures in the first quarter of the year.
Even so, the company, one of Malaysia's larger initial public offerings (IPOs) last year, has been something of a disappointment to its shareholders as its share price has largely underperformed the broader market.
The main reason for investor disaffection is the looming reality that the European-based P3 alliance, which includes Maersk, will no longer call on the port from later this year.
Westports has sought to downplay the news by pointing out that the diminution in cargo volumes would be less than 2 per cent of total throughput and would be more than mitigated by the overall growth in traffic.
Even so, the news appears to have cast a pall over the stock which has not gained much over its IPO price of RM2.50 a share. But it had begun climbing incrementally ahead of the results announcement last Friday and rose again yesterday by 0.4 per cent to RM2.55 apiece.
The company still has a sizeable institutional following because of its growth prospects. It is majority controlled (53 per cent) by the family of Malaysian tycoon G Gnanalingam while a unit owned by Hong Kong magnate Li Ka-shing holds more than 20 per cent.
In its announcement to the stock exchange, Westports said that its operational revenue rose 11.4 per cent to RM348.3 million, driven by growth in throughput which rose by almost 12 per cent to 1.93 million containers.
March also notched a "record" monthly volume of 693,000 containers, the company said, signalling that the effects of the P3 fallout could indeed be mitigated.
In a report yesterday, Maybank called a buy on the stock and estimated its fair value, on a discounted-cashflow basis, at RM2.70 a share.
The bank also seemed impressed by Westports' efficiency. "Despite higher electricity and fuel costs, its first-quarter earnings before interest, taxes, depreciation and amortisation (Ebitda) was maintained at 51 per cent due to operational efficiencies," it noted.
The bank agreed with the firm's view that growth would remain robust this year and the next, estimating that it would remain at least at 8 per cent a year. Given "a decent dividend yield of 4.2 per cent, we maintain our buy on the stock", Maybank said.
http://www.businesstimes.com.sg/premium/malaysia/westports-q1-earnings-jump-38-rm109m-20140506
Many people don't realise that Malaysia's economy is likely to do very well in next 1-2 years, which will still result in healthy purchasing power for properties. But the locals are more selective and will mostly choose landed property over condos, if given the choice of similar location and price. My verdict is landed property will still do well in next few years. Property veterans like Tan Sri Liew will not be pricing his Eco projects at those prices for nothing.
Mystery of Malaysian 1MDB's US$2.3b Cayman Islands fund
It still has not given details of the funds or manager's name
BY ANITA GABRIEL
[email protected] @AnitaGabrielBT
PUBLISHED MAY 12, 2014
[SINGAPORE] Some US$2.3 billion ($2.9 billion) belonging to Malaysia's state-owned fund 1Malaysia Development Bhd (1MDB), ploughed into unidentified Cayman Islands funds, is being managed by little-known Hong Kong firm Bridge Partners, The Business Times has learnt.
The revelation comes at a time when 1MDB is under fire for placing funds in hedge funds abroad, particularly since almost all of its assets - power generation and landbank - are based in Malaysia.
The said funds were invested by Malaysia's state-backed fund through Brazen Sky Ltd - a wholly owned unit incorporated in the British Virgin Islands (BVI) - in a segregated portfolio company (SPC) called Bridge Global Absolute Return Fund managed by Bridge Partners, according to documents obtained by this newspaper.
1MDB has also been pressured to reveal the names of the Cayman Island funds and fund manager, but has not done so.
The documents also reveal that, through the SPC, the monies were invested into six classes of shares of unlisted open-ended funds focused on the energy sector.
While Bridge Partners is a licensed fund manager, it is still unclear as to why 1MDB would outsource its monies to such a modest outfit. The move is also at odds with the Malaysian sovereign wealth fund's mandate to drive key projects in its home base and woo foreign investments into Malaysia.
"Why is a state-owned fund hiring a small firm run by a very smallish team to manage its funds which it may not have complete control over?" asked a market watcher.
Based on its website, Bridge Partners, which specialises in offshore private funds, is led by managing director Mr Lobo Lee Kwok Ning, who has 20 years' experience in equity investments and derivatives. He was previously senior vice-president of Hong Kong Exchanges and Clearing Ltd.
The firm's asset management team has two other directors.
Documents also reveal that a Swiss private bank in Singapore produced portfolio statements on these funds, possibly to indicate that the funds are genuine. It is unclear why the bank felt the need to do that, as such reports are typically issued by the fund manager - in this case, Bridge Partners.
Bridge Capital and Brazen Sky first came into the picture two years ago following a convoluted and perplexing tie-up between 1MDB, then helmed by chief executive officer Shahrol Halmi, and obscure firm PetroSaudi International (PSI), headed by Tarek Essam Ahmad Obaid, a Saudi royalty.
1MDB's tie-up with PSI - 1MDB PetroSaudi - is the fund's first joint venture since it was set up in 2009, not too long after it raised RM5 billion ($1.9 billion) through a bond issue.
The Malaysian-backed fund ploughed US$1 billion cash for its 40 per cent into the US$2.5 billion joint venture firm domiciled in BVI. PSI forked out no cash, only oil and gas assets for its 60 per cent share, which according to documents was valued at US$2.7 billion.
Sources said that, in the early stages of the deal, some 1MDB board members were concerned about the value and quality of the assets being injected and had preferred instead for PSI to fork out at least 50 per cent cash for its portion to match 1MDB's cash outlay.
The pact flopped and, following a series of complex manoeuvrings, issuance of Islamic debt facility and asset flippings, 1MDB's wholly-owned 1MDB International Holdings ended up with a 49 per cent stake of PSI's PetroSaudi Oil Services Ltd (PSOSL). The stake was valued at US$2.2 billion.
1MDB then sold all of 1MDB International Holdings, whose sole asset was the PSOSL stake, to Bridge Partners for US$2.3 billion, turning in a profit of some US$95 million.
To satisfy the purchase, Bridge Partners issued six interest-free promissory notes with a one-month expiry data. 1MDB then invested the proceeds by subscribing for all the shares in Brazen Sky, which in turn reinvested the sum into the SPC.
Documents also reveal that Mr Shahrol, 1MDB's then-boss - who left in March last year to join another government unit - had the sole discretion to decide where the funds would be reinvested.
1MDB has been in the line of fire after its latest financial accounts showed that it carried liabilities of some RM40 billion. It also would have been in the red by as much as RM1.8 billion, if not for a RM2.7 billion revaluation gain on land it got from the government.
The fund, chaired by Malaysian Prime Minister Najib Razak, has been dogged by controversy since its inception five years ago and has had to frequently allay fears that the billions of dollars in its coffers - mostly raised through borrowings and ploughed into controversial investments - are safe.
More recently, following calls by the Malaysian media for 1MDB to bring the funds totalling some RM18 billion back to Malaysia, the fund responded by saying that "substantial portions" of the overseas funds have been brought back and used for energy and property projects and earmarked for future investments.
BT's attempts to contact 1MDB and Bridge Partners for comments were unsuccessful.
http://www.businesstimes.com.sg/pre...sian-1mdbs-us23b-cayman-islands-fund-20140512
It still has not given details of the funds or manager's name
BY ANITA GABRIEL
[email protected] @AnitaGabrielBT
PUBLISHED MAY 12, 2014
[SINGAPORE] Some US$2.3 billion ($2.9 billion) belonging to Malaysia's state-owned fund 1Malaysia Development Bhd (1MDB), ploughed into unidentified Cayman Islands funds, is being managed by little-known Hong Kong firm Bridge Partners, The Business Times has learnt.
The revelation comes at a time when 1MDB is under fire for placing funds in hedge funds abroad, particularly since almost all of its assets - power generation and landbank - are based in Malaysia.
The said funds were invested by Malaysia's state-backed fund through Brazen Sky Ltd - a wholly owned unit incorporated in the British Virgin Islands (BVI) - in a segregated portfolio company (SPC) called Bridge Global Absolute Return Fund managed by Bridge Partners, according to documents obtained by this newspaper.
1MDB has also been pressured to reveal the names of the Cayman Island funds and fund manager, but has not done so.
The documents also reveal that, through the SPC, the monies were invested into six classes of shares of unlisted open-ended funds focused on the energy sector.
While Bridge Partners is a licensed fund manager, it is still unclear as to why 1MDB would outsource its monies to such a modest outfit. The move is also at odds with the Malaysian sovereign wealth fund's mandate to drive key projects in its home base and woo foreign investments into Malaysia.
"Why is a state-owned fund hiring a small firm run by a very smallish team to manage its funds which it may not have complete control over?" asked a market watcher.
Based on its website, Bridge Partners, which specialises in offshore private funds, is led by managing director Mr Lobo Lee Kwok Ning, who has 20 years' experience in equity investments and derivatives. He was previously senior vice-president of Hong Kong Exchanges and Clearing Ltd.
The firm's asset management team has two other directors.
Documents also reveal that a Swiss private bank in Singapore produced portfolio statements on these funds, possibly to indicate that the funds are genuine. It is unclear why the bank felt the need to do that, as such reports are typically issued by the fund manager - in this case, Bridge Partners.
Bridge Capital and Brazen Sky first came into the picture two years ago following a convoluted and perplexing tie-up between 1MDB, then helmed by chief executive officer Shahrol Halmi, and obscure firm PetroSaudi International (PSI), headed by Tarek Essam Ahmad Obaid, a Saudi royalty.
1MDB's tie-up with PSI - 1MDB PetroSaudi - is the fund's first joint venture since it was set up in 2009, not too long after it raised RM5 billion ($1.9 billion) through a bond issue.
The Malaysian-backed fund ploughed US$1 billion cash for its 40 per cent into the US$2.5 billion joint venture firm domiciled in BVI. PSI forked out no cash, only oil and gas assets for its 60 per cent share, which according to documents was valued at US$2.7 billion.
Sources said that, in the early stages of the deal, some 1MDB board members were concerned about the value and quality of the assets being injected and had preferred instead for PSI to fork out at least 50 per cent cash for its portion to match 1MDB's cash outlay.
The pact flopped and, following a series of complex manoeuvrings, issuance of Islamic debt facility and asset flippings, 1MDB's wholly-owned 1MDB International Holdings ended up with a 49 per cent stake of PSI's PetroSaudi Oil Services Ltd (PSOSL). The stake was valued at US$2.2 billion.
1MDB then sold all of 1MDB International Holdings, whose sole asset was the PSOSL stake, to Bridge Partners for US$2.3 billion, turning in a profit of some US$95 million.
To satisfy the purchase, Bridge Partners issued six interest-free promissory notes with a one-month expiry data. 1MDB then invested the proceeds by subscribing for all the shares in Brazen Sky, which in turn reinvested the sum into the SPC.
Documents also reveal that Mr Shahrol, 1MDB's then-boss - who left in March last year to join another government unit - had the sole discretion to decide where the funds would be reinvested.
1MDB has been in the line of fire after its latest financial accounts showed that it carried liabilities of some RM40 billion. It also would have been in the red by as much as RM1.8 billion, if not for a RM2.7 billion revaluation gain on land it got from the government.
The fund, chaired by Malaysian Prime Minister Najib Razak, has been dogged by controversy since its inception five years ago and has had to frequently allay fears that the billions of dollars in its coffers - mostly raised through borrowings and ploughed into controversial investments - are safe.
More recently, following calls by the Malaysian media for 1MDB to bring the funds totalling some RM18 billion back to Malaysia, the fund responded by saying that "substantial portions" of the overseas funds have been brought back and used for energy and property projects and earmarked for future investments.
BT's attempts to contact 1MDB and Bridge Partners for comments were unsuccessful.
http://www.businesstimes.com.sg/pre...sian-1mdbs-us23b-cayman-islands-fund-20140512
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