Next year’s budget appears to reduce the 1Malaysia People's Housing Programme (PR1MA) financing constraints as applicants are allowed to apply for 100% loan from four specific banks. However, Elizabeth Siew Wai Kit doubted the feasibility of the financing scheme, as the loan borrower with a monthly income of RM3,000 will ended up having only RM 1,100 to spend.
Siew gave an example at the Budget 2017 Seminar organized by Malaysia-China Chamber of Commerce (MCCC) today. “A first-time home buyer with a monthly income of RM3,000 will normally be eligible for a loan of RM187,000. Through this special financing scheme, the applicant can now apply for a loan of more than RM295,000.”
“But, is this scheme viable?” she questioned.
Using the loan package offer by Malayan Banking Berhad as an example, for a loan of RM29,500 the mortgage repayment period will last for 30 years with an interest rate of 4.45% plus 1.45% will be applied. Accordingly, the loan applicant will be required to repay approximately RM1,500 to RM2,000 monthly. As a result, the applicant will only have RM1,100 left, and at the same time still be required to bear other costs of living.
“How can this new special scheme solve the financing issue which the young people and the first-time home buyers are facing?”
Siew had also asked a friend who is working in a bank’s loan department if the scheme is workable and the response she received was: “How to borrow?”
The Government has no long-term plans
As compared to Singapore which had developed a 10-year plan for housing schemes, Siew also criticised the fact that the Government had only developed short-term measures.
Moreover, she was disappointed that Budget 2017 did not clarify on the funding for cybersecurity projects.
Siew also mentioned that her law firm’s server was hacked two weeks ago which led to the loss of 20 years’ worth of data and backups, in addition to receiving a blackmail. Although she had reported this incident to the Malaysian Communications and Multimedia Commission (MCMC), the problem has yet to be resolved.
Raymond Chin advises the Prime Minister to make requests from China
MCCC’s Investment Management Committee chairman Raymond Chin said, the Prime Minister should follow the example of certain leaders of a country in Africa to make requests to Chinese authorities when he visits China at the end of this month.
“When I visited Beijing a few years ago, I encountered African leaders making demands to the Chinese authorities. Thus, the Prime Minister should not to be reserved during his visit to China,” he said.
Raymond is expecting the Prime Minister’s visit to China to be beneficial to Malaysian businessmen.
Tai Lai Kok advises sole proprietors not to convert their businesses into small-and-medium enterprises (SMEs) for tax reduction
KPMG Malaysia’s executive director (Tax) Tai Lai Kok commented that sole proprietorships should not convert their businesses into SMEs predominantly for the 18% corporate tax rate incentives listed in the Budget 2017 and the reduction tax rate of 1% to 4%.
“Sole proprietorships should only convert their businesses to SMEs when it is necessary or required. Otherwise, the loss might outweigh the gain if discovered by the authorities,” he remarked.
“Micro-SMEs are businesses with annual sales turnover that does not exceed RM250,000.”