Goodbye Really Free School

It’s with sadness that I discover the Really Free School has shut down. It was one of the most original responses to education cuts, a band of misfits occupying buildings to host voluntary lecture programmes, taking a grand piano with them wherever they went.

Back in February I joined forces with Corporate Watch, in presenting a primer on the financial crisis at the school. It took place in an old mansion in Bloomsbury Square, in an upper-floor room with a projector. I had a double-sided A5 page of notes. On the one side was written ‘Credit; Ownership; Currency; Commodities; Derivatives’. On the other side was written “Commercial banks, investment banks, interdealer brokers; Institutional investors, hedge funds, private equity”. I started by holding it up and saying, “On this side is all the stuff the financial sector deals with, and on this other side, is all the people that deal with it.”

That’s not entirely accurate, but I’m a believer in establishing simple frameworks around complicated topics. It at least allows listeners to feel in control, rather than the panic brought on when someone raps about abstract evils and twisted theories. In the audience was a zonked-out cat called Andy – he’d worked for a hedge fund, and subsequently progressed into a life of squatting and community work. People think that’s strange, but I don’t think so at all: The hedge-fund hounds are often individuals on the borderline, interesting people with crazy ideas. We got chatting afterwards about financial activism, a fascinating topic I'll develop on in later blog posts.

I went back to the school several times. I took notes at a workshop on internet security. I watched a film about a feminist revolution. I saw a lady called Barb Jacobson give a talk about alternative monetary systems. I arrived for a session on setting up a ‘Timebank’, but nobody pitched up to give it. I attended an amazing poetry session, got drunk and recited my favourite haiku: “Oh avocado, how tasty you are to me, all green and mushy.”

There was some stuff of questionable quality. Like part 3 of that film Zeitgeist, utterly shite. And then there was the talk by a guy who’d written a paper on tax havens. He spoke endlessly about critical theory, rather than tax havens, and used words like ‘aporia’ and ‘bios’. At some point I lost it and had to leave.

But, when push comes to shove, that was the real beauty of the Really Free School. If you wanted to contribute, you really were free to do so, and if you wanted to leave, you could. The real question is whether it ever had the internal impetus to keep going. Perhaps it needed a more directed education programme, a process of strategically commissioning talks rather than relying on organic volunteering. The idea of a travelling school materialising in old buildings is catchy, but you need substance to complete it.

Real Property Gains Tax (2011)

Malaysia is known as "tax heaven" of the world. Why? Because Malaysia does not impose tax on any capital gains derived from investment, such as shares, unit trust... But, there is only one type of capital gains that attracted tax - property.

PARC @ One South, Seri Kembangan

Real property gains tax (RPGT) is a form of capital gains tax. RPGT is charged on gains arising from the disposal of real property in Malaysia. These so called real property is defined as:

• any land situated in Malaysia and any interest, option or other right in or over such land; or
• shares in a real property company

How much?

Actually, we have RPGT in our tax system many years ago until 31 March 2007, when government abolished RPGT to attract foreigners to invest in Malaysia. But then, from 1 January 2010, RPGT is re-imposed at the rate of 5% on gains arising from disposals of chargeable assets in respect of real properties that are disposed within 5 years of owning.

What is real property company?

It is a controlled company holding real property or shares in another real property company as a major asset. And, the "major asset" here refers to defined value > 75% of the value of its total tangible assets.

Mon't Kiara

Withholding of RPGT

With effect from 1 January 2010, an acquirer of chargeable asset must withhold 2% of the total value of the acquisition price to be paid to the Inland Revenue Board within 60 days from the date of disposal.

Are there any exemptions?

• an amount of RM10,000 or 10% of the chargeable gain, whichever is greater, accruing to an individual (w.e.f 1 January 2010)
• gain arising on disposal as a result of compulsory acquisition of property under law
• gain accruing to an individual who is a citizen or a permanent resident in respect of the disposal of one private residence

In other words, everyone of us have one "Free RPGT" card in hand. This is the ONLY card that the government gave us, and we can decide to use it or not, and when to unveil the card. You can saved it for another day, because it is not compulsory to use it for your first disposal.

G-20 Demonstrations: Two Years On

On Thursday the Guardian reported on a High Court ruling, holding that the Metropolitan Police were unlawful in ‘kettling’ protesters during the G-20 demonstrations in April 2009.

Two years ago, I took this photo. It was some three hours after the police line came like a running of the riot bulls down Bishopsgate, randomly trampling flower-children in a startling display of the arbitrary powers of the state. The bulldozing was sanctioned for some official reason not quite understood by anyone present, especially considering they’d chosen to target the hippies rather than the anarchists, but apparently it was necessary, for some reason, unknown to anyone present. Note the Financial Times in the foreground. There was an article in it by Martin Wolf entitled ‘The urgency of now: Why tomorrow’s G-20 summit will fail to deal with the big challenges.” It made for interesting reading while the police deployed their state-of-the-art kettling strategy.

This guy in the photo was employed as a wall of silence, but I chatted to him, and he made thoughtful comments like “I am not authorised to answer questions on the situation.” I took a piss under a big metal door, kind of an attempt to have my say in the face of this deprivation of voice. A high-spirited dude with overalls came over with his hand in the air. “Hey man,” he shouted, “high five, you came disguised as a banker!” We slapped hands, and I said, “Actually I’m a derivatives broker”. He froze on the spot. “Oh right, I’ve got a friend who’s an accountant.” I had to laugh at the suggestion that there was some similarity between an accountant and a broker. “Really, accountants are not nearly as bad as derivatives brokers man. Accountants can only really distort numbers, whereas we can distort entire markets.” He stood there uncomfortably, but I suppose it’s not usual to have this kind of conversation at a rally united by an apparent stand against the excesses of financial capitalism.

I guess the whole kettling strategy was a massive success. By inciting anger that didn’t originally exist, the police forces justified their presence in a self-fulfilling feedback loop. It was a loop that got unstable though, and one that jeopardised their ability to extricate themselves from the situation. They were on the verge of losing the psychological edge and spontaneous forms of coherent rebellion were starting to emerge. Nothing brings out the ‘fuck you’ in people like arbitrary power, and sooner or later, people get together and override it. At that point, bringing in the snapping dogs only makes people angrier.

So, after six hours, they let us out. Some of the cops looked as if they were about to cry. I walked past one of the guys and said, “Thanks man, you did a good job tonight.” He almost choked. “Thank you, that’s the nicest thing anyone has said to me all day.”

He did do a good job, but it was a job in the service of an utterly pointless attempt to stifle a necessary part of the workings of a democratic society. Good to see that the high court has recognised that.

MRT at Iskandar: Is it Viable?

When everyone talk about mass rapid transit (MRT) system at KL, it's reasonable given the terrible bumper to bumper traffic jam every working days. Certainly, it creates a buzz in Malaysia with its RM50 billion price tag. Maybe because of the buzzing topic, Iskandar Regional Development Authority (IRDA) also looking at the possibility of implementing a 500km MRT within the region which would also provide a direct link to Johor Bahru. The project is scheduled for completion by 2020. What's your reaction?

I believe many people will think the same with me - unbelievable. My jaw drops down the floor thereafter. We do not have to perform  those sophisticated calculation to judge whether the Iskandar MRT is viable or not. I came out with these 3 points.

3 Stupid Questions to ask our-self

1. Population
• KL is capital of our country, while Iskandar is a region which encompass the capital of a state
• Do you think that Iskandar has more people than than the capital of KL?
• Some more, Iskandar is 3x larger than Singapore, but with much lesser population
2. New vs Old
• KL is an not well planned city, which contributes to traffic problems now
• However, Iskandar is a new city with ample of land, with ample of time to plan. Why not take your land and time as an advantage to plan ahead?
• We don't have choice in KL, we're forced to resort to MRT
3. Alternative ways
• Well, everyone knows that MRT system is an extremely expensive project. Thus, we should source for other ways first, before considering MRT.
• With ample of vacant lands still available now, why straightaway jump to MRT?
• Also, population are not there yet, what's the urgency to build MRT now?
• Instead, we should consider the following system first: Roads, Bus, Highways, LRT, then only MRT. MRT should be the last due to higher cost.

The 5 flagship zones of Iskandar Malaysia, namely Johor Bahru City (A), Nusajaya (B), Western Gate Development (C), Eastern Gate Development (D), and Senai-Skudai (F)

Wait... What am I using? Common sense, man (without calculator in my hand).

To support my view, below is what written by OSK Research:

"We feel that the chances of the Iskandar MRT being implemented anytime soon is slim. Based on IRDA's estimated cost of RM30m/km, the entire project will work out to RM15bn which is certainly a huge sum. Although an efficient public transport network is a crucial element of Iskandar to emerge as a thriving metropolis region, we think that it is still too soon for an MRT to be built. At this juncture, we believe that the Federal Govt is probably going to focus more on the KL MRT, LRT extension and various other ETP projects to ensure that it kicks off on time before considering the Iskandar MRT."

Source: IRDA, Iskandar Malaysia website

Sarawak state election 2011: BN to lose 2/3 majority?

Coming this Saturday, 16th April 2011, the Sarawak state elections will be held and Malaysians will be watching closely on the outcome. Of course, I do not know the outcome yet. In fact, I am afraid to predict it, as the "not so good" result will jeopardize my share investments. I am not a Sarawakian either, what should I gauge against? As Chinese said, outsiders tends to be clearer than insiders. As such, Finance Malaysia refer to the following article taken from Credit Suisse as a reference, a view from foreigners.

BN's 'fixed deposit' will be put to test?

The Sarawak state elections will be a key barometer for Prime Minister Najib to gauge the support for Malaysians for the incumbent Barisan Nasional (BN). While previous state elections were seen to be non-events, as Sarawak has always been BN stronghold, these particular polls will likely be the most hotly contested. This round, for BN to lose the 2/3 majority, it will need to lose 24 seats or an additional 15 seats.

4 Disadvantages to BN

1. "Bible"
• On the surface, the 'Bible' issue has been resolved, but this issue could have hit a sour note with the Christian voters. To recap, the row over the use of Malay-language Bibles centers on the use of word 'Allah' for God.
• 43% of Sarawakians are Christians
2. "Native customary rights"
• There are supposedly over 200 pending cases over the 'native customary rights' land problems. These cases are seeking to overturn the directive made by the Minister for Resources Planning in Sarawak to extinguish their native customary rights and revert the land to the Sarawak government.
• 56% of total voter population in Sarawak are natives
3. Taib's alleged immense wealth
• Chief Minister of Sarawak, Taib has ruled Sarawak for 30 years. The opposition has highlighted Taib family's alleged immense wealth and businesses. The key Chinese party in Taib's stable, SUPP, will likely be taking the brunt of the Chinese's hostile sentiment towards Taib.
4. Poverty in Sarawak
• Accusations of money politics and corruption could surface during the Sarawak state elections, as the level of poverty is one of the highest in Malaysia, although Sarawak is one of the riches states in natural resources (oil, gas, timber and palm oil).

What would be the outcome?

BN currently has 87% of the state seats. Credit Suisse believe that BN will lose more seats but will unlikely lose the 2/3 majority. This suggests that BN will hold the General Elections in 2012 (and not 2011), which is good news for the stock market, as the government will have to dish out more 'goodies' and continue spending.

What if there's a political tsunami?

It would be a buying opportunity. If the voters swing significantly to the opposition, we look to the 8 March 2008 general elections to gauge the impact on the stock market. If the unexpected happens, we conclude that a knee-jerk downward reaction would provide a buying opportunity for fundamentally-strong stocks as they should outperform once the shock wears off.

Credit Suisse Top Picks

PetChem, CIMB, Axiata, Genting, Gamuda, AirAsia, IJM Corp, UEM Land and RHB Cap.

Source: Credit Suisse

Hans top-ranked, twice!

I was recently informed that I actually top the ranking list of the (all-time) most downloaded research papers at the University of Technology, Sydney working papers series in Finance! My paper Merton for dummies: a flexible way of modelling default risk has apparently been downloaded 2683 times. See the figure or go here. I wrote that paper while working at University of Technology, Sydney in 2002-2004, that’s why it appears on their working paper series.

I was particularly happy about hearing this since I already top the ranking list of the (all-time) most downloaded research papers at Lund University working papers series in Economics with another paper. My paper Credit Default Swaps and Equity Prices: The iTraxx CDS Index Market has been downloaded 4276 times. See the second figure or go here. Notice the distance to the second most downloaded paper..... :)

I am not naïve enough to equate this in any way with these two papers being the best pieces of research coming out of these two institutions but, nonetheless, I enjoy the fact that so many people has made the decision to download (and hopefully read) my pieces of research. It is simply a nice acknowledgment of ones effort.... What a pity, though, that I am not paid per download!

KLCI: What the Hell is going on? + Invest Malaysia 2011

Thinking that yesterday's 13points drop is enough? Today, KLCI slumps again for the 2nd day in a row. Are you expecting it? Personally, I don't think most of us can predict the future. But, what I can say is that many investors like me would positioning our money very well, anticipating some good announcements during Invest Malaysia 2011 Conference today and tomorrow. If you're thinking the same way, Good Luck!!!

TheStar picture

Any BAD news?

Excluding foreign news, NO bad news at all in Malaysia. But, investors see the opposite side now - no good news = bad news!

Profit-taking activities set in on Malaysia market beginning this week. If you're not the one who cash out yesterday, you would probably forced to stay on holding until the "tsunami" is over. Money is washing away from the market, flowing overseas (capital outflow by foreign funds). That's why banking stocks, Genting, Petronas Chemicals took a beating today, pulling down KLCI as a result.

Souce: Yahoo! Finance

While many investors are waiting for the goodies during Invest Malaysia 2011 conference, it seems like the party is over without much excitement. First, let's us summarize the announcements made today:

1. 2nd Capital Market Masterplan (CMP2) to swell the value of the capital market to RM5.8 trillion through greater internalization from RM2 trillion now
• New dual licensing scheme to make it easier for dealers in the equity market to become licensed to trade in the derivatives market
• Increasing the number of day traders by almost 3x to enable more dealer representatives to become specialized traders
• New private retirement scheme is introduced
2. Listing of Felda Group's sugar business expected in July 2011
3. In attracting Malaysian professionals to returned, flat 15% income tax rate for 5 years is introduced

What is lacking?

Surprisingly, the Pos Malaysia's stake which is being divested by Khazanah still remained a mystery. Who would be the winner? PM:"The disposal of Pos Malaysia is now in final stage". Maybe due to this news, DRBHicom (the main contender who tipped to win the stake) falls sharply from recent high of RM2.50 to closed RM2.24 today.

Can we turnaround in 2nd-half?

1st-half (today), the impact had undeniably failed. Let's monitor the 2nd-half (tomorrow). As reported by various analysts, tomorrow's session will highlights the Greater Kuala Lumpur related projects. As such, the Mass Rail Transit (MRT) project should take to the stage, and updated on the progress of project. MRCB and Gamuda should be in focus tomorrow. But, would these counters facing the same DRBHicom's fate too?