Kopi O vs. Latte

The Star

We say white coffee, you say latte

Fingers are again pointing at youths’ lifestyle for their high rate of debt and bankruptcy. But young people are saying it is a generation gap.

You may read the whole article at 

http://www.thestar.com.my/News/Nation/2014/11/09/We-say-white-coffee-you-say-latte-Fingers-are-again-pointing-at-youths-lifestyle-for-their-high-rate/

So "old" men/women say "Hey Big Spender". Young men or women shouted back "you don't understand".  You take bus. Use dumb phone. They screamed "be reasonable".

If we look at the current developments around the world, the income disparities is certainly an issue. Malaysia is no exception. Those in middle 40% income growth is certainly not doing better. The income growth is certainly slow.

Each year, we produce about 180,000 graduates and close to 40% of them(public university) are either jobless or stuck in mismatched fields. http://www.thestar.com.my/News/Community/2013/07/27/Close-to-half-of-Malaysian-graduates-either-jobless-or-employed-in-mismatched-fields/

We are also caught in a vicious circle due to lack of quality graduates causing us to get stuck with middle income trap. So a fresh graduate may be ended up earning around RM 2,500 to RM 3,000/month. So there is a truth of Gen Y claims that today's employer pay them peanuts.

If income growth is slow or stagnant, we do have a major issue especially they have to battle with high costs of living. I will not dwell into details of big picture how central bankers around the world had contributed to this problem. Just to mention briefly that loose monetary policies, bankers greed and lack of government supervision created the messes and bubbles that resulted the world is going through tremendous adjustments. 

Is car a necessity? Is smartphone a necessity? Short answer is Yes. Given such a screw up public transportation in Malaysia, it is impossible to move around. Is smartphone a necessity? Yes, there is not much different between a dumb phone and a smart phone. Speed is a must in today's society. Hence, to be reachable and stay connected is a must.

Then the argument of Kopi O and Latte. Is is wrong that Gen Y hangs around Starbuck for RM 15/cup of coffee? My view, if it is a social gathering, 3 to 4 times a  month should not kill you.

So Gen Y reader may feel better because that sounds like at least this Gen X writer understand what is Gen Y is going through. However, before you hit recommended or thinking to send it to you father or mother, please read on. 

The question is why youth ended up with bankruptcy? Or what are the ramifications of a bankrupt? There are 34 FAQs that everyone should know. I think the law is a bit strict in Malaysia. For not able to pay RM 30 k can end up with bankruptcy is truly not worth it.

1. Can a bankrupt continue using his existing credit card?

A bankrupt can only use his existing credit card up to the amount of RM1000.00. If the bankrupt wishes to continue using his credit card for an amount of more than RM1000.00, he must notify the issuing bank or finance company as to the status of his bankruptcy so as to allow them to decide whether they are prepared to continue to extend the credit to the bankrupt. If the bankrupt fails to notify the issuing bank or finance company, he will be deemed to have committed an offence under the Bankruptcy Act 1967.

2. Can a bankrupt make an application to DGI to reduce the amount of debt?

The DGI has a duty to supervise the conduct of a debtor and to administer the debtor's estate. However, DGI has no power to reduce the amount of debt that has been filed by creditors. If a bankrupt intends to reduce the amount of debt for the purpose of making full settlement, he should write in or meet the officer at the particular Bank stating his intention to do so. In the event the Bank agrees to lower the amount of debt, he has to make payment in the specified amount to DGI. We will then proceed to declare the dividend to creditors.

3. Can a bankrupt make direct payment to the creditor to settle his debt?

A bankrupt is not allowed to make direct payment to the creditor and all payment has to be made through the DGI. The payment will be credited into the estate account and distributed to the creditors who have filed in Proof of Debt.

4. Can a bankrupt open a bank account or continue using his existing account?

Once person is made a bankrupt, his existing account shall be deactivated and withdrawal of money would be debarred. A bankrupt, however, may open a bank account or continue using his existing account for reasons such as crediting his salary or any profit gained provided he obtains the permission of the DGI. He would then have to make an application for permission of DGI for reactivation of the account.

The application to obtain the DGI's permission in both cases shall be made to the respective MdI branch, where his bankruptcy case is being administered.

5. Can a bankrupt transfer his property?

A bankrupt is not allowed to transfer his property to a third party once a Receiving and Adjudication Order has been entered against him. As soon as a person is declared bankrupt, any of his property shall be automatically vested upon the DGI.

6. Can a bankrupt travel overseas?

A bankrupt may not travel overseas unless with the written permission from the DGI or after obtaining a court order allowing him to do so. In order to get a written permission from the DGI, a bankrupt has to make an application by stating his intention, reasons and duration of travelling. The application form with supporting documents must be sent to the Branch that administers his. Our dedicated officers will process the application and will inform the bankrupt on the decision of his application via his preferred mode i.e e-mail, phone call or letter. The application can be downloaded in our website under 'Forms' link.

7. Can a person declare himself/herself a bankrupt if he is unable to pay his debts?

A person can make an application in court to declare himself/herself a bankrupt as allowed under section 7, Bankruptcy Act 1967. The person is required to file a petition in a High Court stating his inability to pay his debt. The procedures required to be followed are stated specifically in the Bankruptcy Act 1967 and Rules, and one can consult a solicitor to take further actions. For further information, one can contact the nearest MdI's branch for advice or MdI's Complaints Unit directly.

8. Can I remain as director of a company if I have been made a bankrupt?

An undischarged bankrupt is disqualified from acting as a director of a company pursuant to the Companies Act. If a bankrupt wishes to act as a director of a company, he/she must seek the approval of the DGI or grant of leave from the Court.

It is also important to note that except with the permission of the DGI or Court, a bankrupt is not allowed to:

(a) work in the business of a spouse, children or relative; and

(b) enter or carry on any business, either alone or in partnership.

9. Can my parents who are bankrupts visit me in other country?

Travelling abroad is allowed only with the permission of the DGI who has been entrusted with the discretion by law. The primary purpose is to ensure all bankrupts give their utmost priority to payment of debts. That is the reason why social visit is strongly prohibited because it is assumed that such money should be used for the purpose of paying the debt. Factors such as good cooperation, compliance to rules and obligation, initiative to settle debt are utmost important in determining whether a bankrupt is allowed to travel overseas or otherwise. All documents relating to travelling overseas can be obtained in our website under 'Forms' link.

10. Can the Department of Insolvency (MdI) make a person bankrupt?

MdI does not make people bankrupt. As aforementioned, a person is made bankrupt by a court order either by an application by a creditor, or by his own application. Once a bankruptcy order is made by the court, the DGI in law will become the administrator of his estate and also to oversee his conduct towards an effective completion of his bankruptcy.

11. Do my creditors have a right to seize my properties after I have been made a bankrupt?

As a bankrupt, your assets vest in the DGI. Creditors can take no further legal proceedings against you to recover any debts incurred before your bankruptcy. Nevertheless, a secured creditor may seize and realize your property. The proceed of the sale will be used for paying off your debt, in some cases where there are balance money after paying off the debt, it will be returned back to DGI to be credited back into the estate account of the bankrupt.

12. How can a bankrupt be released from his bankruptcy status?

There are three main ways as to how a bankrupt can have his bankruptcy terminated:

(a) Making an application in court at any time for the bankruptcy order to be annulled on grounds ie debt has been paid in full or that he ought not to be made a bankrupt on some technical grounds;

(b) Making an application in court at any time for a court discharge. This is subject to a stringent requirement and the Insolvency Department has to put a report emphasizing among others the conduct and cooperation of the bankrupt with the department. 

(c) Making an application to the DGI for a discharge under section 33A of Bankruptcy Act 1967. Such application can only be made only if 5 years has lapsed from the date order was made upon satisfying some criteria imposed by the DGI for the exercise of his discretion. Among the factors that the DGI will take into consideration are the conduct of the bankrupt, the extent of his cooperation with us, the cause for bankruptcy, old age and infirmities etc.

13. How can I be made a bankrupt? 

You can only be made a bankrupt by a court order. Nevertheless, there are two methods in which the court order may be granted i.e. either by a creditor commencing a bankruptcy proceeding against you by presenting a creditor's petition in court, or you may also voluntarily seek a court order to be made a bankrupt by presenting a debtor's petition in court.

14. How do I conduct bankruptcy search? 

You may conduct an online search at our website www.insolvensi.gov.my under the 'Services' link. A fee of RM12.00 will be charged to your credit card. Please note that payment must be done via credit card only. Another method is via counter in our Headquarters Putrajaya. A fee of RM10.00 is payable via cash. You will receive the bankruptcy search result within 15 minutes.

15. How does my bankruptcy affect my current or future employment?

Bankruptcy does not prevent you from working. Nevertheless, a bankrupt working in other sectors should check whether there is any stipulation of such in his/her employment contract or other company documents. Please refer to 'RESTRICTIONS ON BANKRUPT'.

16. If I am Director of a company or a Partner in a firm and I’m adjudged a bankrupt, would it affect my position and role in the company or firm? 

In such circumstances, if you wish to proceed to be in control of the management, you must seek the DGI's permission or you may obtain the court's permission. If after been declared a bankrupt and you accept an offer of such position, similar requirement applies:

(a) A bankrupt is not allowed to enter into or carry on any business either alone or in partnership, or become a director of any company or take part in the management of any company except with the permission of the Director General of Insolvency (DGI) or court. 

(b) A bankrupt is not allowed to work in the business of a relative except with the permission of the DGI or court.

(c) A bankrupt working in other sectors shall be subject to the terms and condition stipulated in his/her employment contract and the laws related to that professions.

17. Is there a minimum amount owed for a person to be a bankrupt? 

Yes, the creditor may file for bankruptcy action against you if the debt owing is more than RM 30,000.

18. Is there a possibility a person can be declared bankrupt without his knowledge? 

Yes, a person could be made a bankrupt without him knowing it. This may be due to the legal document is sent to his old address; he does not update his address; does not reach him, doesn't read newspaper if the document is served by a substituted service procedure, he did not turn up in court, he doesn't bother to accept or open any legal document sent to him at his address. 

As to the said procedure of notifying the judgment debtor, there are rules and procedures to be followed in varied situations. Generally, all service of court documents to make a debtor bankrupt must be personally served. For this, most creditors will rely on the most recent address in their record. This will be very much depending on the borrower or guarantor to update the particular detail. In most cases, it is shown that they failed to locate and served those people. 

In that situation the law allows creditor to serve using what is called a substitute service procedure i.e by advertising in the papers and after certain days, the debtor or guarantor is deemed to have received the notification of bankruptcy.

19. Is there an automatic discharge for a bankrupt? 

There is no automatic discharge of a bankrupt in Malaysia laws, irrespective of age. Only bankrupt with a good conduct can be considered for a discharge. Good conduct means:

(a) Good co-operation as and when required by any officer of MdI; 

(b) Upon being adjudged a bankrupt, he will attend to the MdI's office immediately when required to do so;

(c) Have submitted a complete Statement of Affairs within a stipulated time given by MdI;

(d) Regularity in making payments or monthly contribution;

(e) Compliance with the DGI's and Court order;

(f) Compliance with all the restrictions under section 38 of Bankruptcy Act 1967;

(g) Submitting an Income and Expenditure Statements every six months;

(h) Informing the Department of any changes of address and income;

(i) Did not make any direct payment to the creditors; and

(j) Declaration of dividend

DGI has discretion to discharge a bankrupt based on certain specific factors but must also be accompanied with factor of good conduct. The factors are:

· health problem/prolong illness (supported by medical report); 

· too old (70 years old and above); and

· case administration exceed 5 years.  However, the bankrupt must have shown a good conduct prior to the suffering/ illness.

20. Once I’m declared as a bankrupt by the Court, will my other secured or unsecured creditors have the power to deal with my properties?

Generally, once you're declared as a bankrupt, all properties vest in the DGI. Nevertheless, a secured creditor may deal with your property under section 8(2) of the Bankruptcy Act whereby such property will be realized within 6 months from the date where a Receiving Order. In cases of unsecured creditors, they have no power to deal with your property and if any unsecured creditor intends to proceed with any legal action against you, it may only be commenced with the leave of the court. Apart from filing a suit against you, unsecured creditors should file their Proof of Debt.

21. Since I need the permission of DGI to continue my existing job or for future employment, what steps shall I take to obtain such permission?

You must forward a written application to the DGI through any MdI branch where your case is being administered. Please take note that together with your letter, you must attach a copy of all relevant documents to support your application such as, a letter confirming your current employment of future recruitment, list of your job scope within the organization, pay slip and an official company search of your organization. 

If the DGI decides to grant you the permission, he may impose conditions as he thinks fit. You must remember that it is compulsory for you to comply with all the conditions notified to you as failure of compliance will subject you to contempt of court, punishable with imprisonment.

22. Since I’m a bankrupt, what will happen to my property? 

All properties shall vest on the DGI except for those listed under section 48(1)(a)(ii) of the Bankruptcy Act 1967. This includes the tools of his trade and the necessary wearing apparel and bedding and other like necessaries of himself, his wife and children to a value not exceeding RM 5,000.00 in the whole. All your properties which are vested on the DGI will be sold and when completed, the proceeds shall be distributed amongst creditors.

23. What are the disqualifications of a bankrupt?

Upon the adjudication, the bankrupt is disqualified from:

(a) holding the office of a Member of Parliament;

(b) holding public office;

(c) holding certain positions in statutory bodies, registered societies or organizations;

(d) practising in certain professions;

(e) carrying on business alone or in partnership or by way of a company;

(f) working in the business of a relative;

(g) maintaining any action without the sanction of DGI other than an action for damages in respet of an injury to his person;

(h) leaving Malaysia without the previous permission of DGI or court;

(i) receiving pension or other gratuity; and

(j) enforcing his rights under certain legislation.

24. What are the procedures to be followed by a person once he’s been adjudged a bankrupt?

Once a person has been adjudged bankrupt by the court, he must attend to MdI's branch that administers his bankruptcy case. The branch that administers a bankrupt's case usually is the one nearest to the High Court where the bankruptcy order was made. Once he attends the branch, he will be required under the bankruptcy law to provide his details in a preliminary enquiries session, among others his full name, identification number, residential address, details on family members and causes of his bankruptcy. The bankrupt will also be required to file in Statement of Affairs which needs him to disclose his assets and liabilities to the DGI.

25. What are the responsibilities of a bankrupt?

Upon the making of the bankruptcy order and throughout the bankruptcy period, a bankrupt must give full co-operation with the DGI in the administration of his bankruptcy and the realization of his assets. The bankrupt must provide information on his assets and liabilities, financial transactions and other relevant matters.

Bankrupt's responsibilities include:

Attending at the DGI's office as soon as possible upon the making of the Receiving Order and Adjudication Order and other subsequent meetings with the DGI whenever notified;

Handing over all assets to the DGI;

Submitting a completed Statement of Affairs;

Submitting an Income and Expenditure Statements every six (6) months;

Attending all meetings of creditors;

Making contribution / payments towards bankruptcy estate out of personal income;

Refrain from obtaining further credit;

Shall not to obtain a credit of RM1,000.00 or more from any person without informing the creditor his status as a bankrupt;

Not to make payments direct to the creditors;

Informing the DGI immediately of all changes of name, address, telephone number, income, property and other relevant information;

Responding to the DGI's inquiries within a stipulated time; andComplying with DGI's, Court orders and provisions in the Bankruptcy Act 1967

26. What are the risks taken by financial institutions if they decide to give loan to a person who has already been made a bankrupt?

If the lender is aware of the bankruptcy status of the borrower and decides to approve the loan nonetheless, the risk will be upon the lender. The lender must bear all risks in the event the borrower i.e. the bankrupt fails to service the loan.

27. What effect does bankruptcy have on the employment of a bankrupt in certain professions?

A bankrupt may not engage in particular trades or professions where there may be certain restrictions imposed by professional associations or licensing authorities, such as lawyer, accountant, liquidator, quantity surveyor or act as a director of a company. The relevant professional bodies should be consulted for further information.

28. What happens to the bankrupt’s assets or properties once he is adjudged bankrupt?

According to Section 24 (4) of the Bankruptcy Act 1967, all of the assets and properties of the bankrupt will be vested upon the DGI.

29. What is bankruptcy? 

Bankruptcy refers to a process where a debtor will be declared a bankrupt pursuant to a court order. All property belonging to the bankrupt will vest on the Director General of Insolvency (DGI) and the DGI has the responsibility to sell all such assets. Once this is completed, the proceeds of the sale will be distributed among creditors who have filed their proof of debts with the DGI's office.

30. What is the difference between an annulment of a bankruptcy order and a discharge from a bankruptcy order?

An annulment has the effect of terminating a bankruptcy order that was made against you, as if the bankruptcy order was never made. On the other hand, discharge from a bankruptcy order relieves you from all of your debts provable in the bankruptcy except for debts due to the Government, State, and Attorney General in respect of bail bonds and any provable debts which were incurred by means of fraud or fraudulent breach of trust.

31. What should I do once I am a bankrupt? 

Once you have been adjudged a bankrupt, you are advised to come to our Branch as soon as possible. The Branch that is administering your case will be at the same state where the the bankruptcy order is/was made. You are expected to give full cooperation and disclose every detail pertaining to your income to our Insolvency Officer. We will then assist you in completing all mandatory forms.

32. Whether a bankrupt is allowed to deal with his assets for instance charge his property? 

A bankrupt is not allowed to deal with his property as provided under Section 24 (4) of the Bankruptcy Act 1967 because all of his assets and properties will be vested upon the DGI. Therefore, any transactions and dealings on his properties can only be made by the DGI. A bankrupt is also not allowed to enter into any dealings which involve monetary value.

33. Why are there instances where a person is unaware that he/she has been declared bankrupt by the Court? 

There are few reasons why a bankrupt is unaware of his bankruptcy status, among others is when the service of Bankruptcy Notice and Creditor's Petition was made by way of substituted service. Substituted service is made via an advertisement in local newspaper or posted on the notice board in court. A bankrupt may not be aware that a bankruptcy proceeding has been initiated against him. Substituted service is done when the bankrupt cannot be located mainly due to a change of address.

34. Will the status of bankrupt affect my existing job or my future opportunity to be employed as an ordinary employee? 

When you are declared a bankrupt, it would not deny you of your right to continue serving with your current organization. Neither would this status prevent you from any future or potential recruitment. However, you must be subjected to your terms of contract with your current employer. For instance, where the contract requires you to inform the employer if you are declared a bankrupt, then you must inform your employer of your status.

http://www.insolvensi.gov.my/faqs/bankruptcy

I used to get nuts for not able to figure out how people can ended not able to pay RM 30,000 debts. I am still getting nuts for not able to figure out today.

Car installment RM 500 for Myvi

Starbuck RM 30 x 4 RM 120

Cellphone bill RM 100

Petrol RM 250

Food RM 8 x 3 x 30 = RM 720

Total RM 1,690 = Savings RM 810 if one earns RM 2,500

So saving after 1st year coming out to work =  RM 9,720. Ya....hooooo.....can buy a nice iPhone and some new shirts and shoe.

Work damn hard, got RM 300 increment. New salary will be RM 2,800. So how to get bankrupt?

You can if you have this scenario

Car installment RM 1,217 for a sexy Europe car in the range of RM 100,000.

Starbuck RM 30 x 4 = RM 120

Cellphone bill RM 100

Petrol RM 300

Food RM 8 x 3 x 30 = RM 720

Recreation, Shopping, travel RM 500

Total RM 2,957. If one earns RM 2,500

Ended up debts of RM 5,484 after a year on credit cards.

Year end - travel to Europe - RM 15,000 on credit card, swear will cut expense after the trip.

So, total debts = RM 20,484. Interest 18% a year or monthly interest RM 307/month. Not to mention car insurance of at least RM 3,000, etc......

If we do the math, it does not take long to be GAME OVER.

One of the best articles - Malaysia-Finance: Investing Paths

Time really flies. I first got to know Malaysia-Finance blogspot by reading his articles on The Star. That was in early 2008. I like his Investing Paths instantly and I think this can be a classic piece that will never aged.

He summed very nicely about different styles of investment and what every investor would most probably have gone through. I can relate instantly when I read his article because I tried most of them. What I like the best was his best advice that summed up nicely at the last paragraph of this article. 

P.S. I will be back and have a lot of things to say when the bear market is back! Until then posting will be extremely infrequent.

_______________________________________________________________

Investing Paths
Everyone who starts investing will try to understand the stock markets by talking with others who have been investing. Then we all move on to reading books by the Grahams, Lynchs and Buffetts of the investing world. Probably after losing more money, we will gravitate towards the technicals and charting gurus: the waves, oscillators, fibonaccis, RSI, momentum, etc. So what do we end up with?

Some of us stick to a tried and trusted way of investing, or just something we are comfortable with, or something we can understand. So which groupie do you belong to?

Fundamental Analysis – This group basically looks at the cause-effect in investing variables. This can be broken up into two groups, namely, top-down or bottom-up. The former refers to getting the macro picture and capital flows correct. This will give the investor a proper perspective on country and currency exposure. If you get the country and currency correct, it doesn’t really matter much about picking the right stocks. Get the big picture wrong and it matters little whether your have picked some great value stocks – great value stocks would remain just that, great value, not performing stocks.

Then there are those who would swear off the big picture volatility analysis, seeing stocks as basically long term companies doing a certain kind of business. The bottom-up investor would stay focus on picking undervalued stocks and based on the theory that holding a good long term stock would eventually outperform in the long run, riding out the volatility.

A financial analyst or business analyst would be doing things from a bottom-up perspective. Breaking down product lines, revenue streams, debt levels, cash flow analysis, product outlook, business model, margins and sustainability of earnings, among others.

To be fair, most fundamentals investors employ both approaches in some way or other. A top-down person would need to be more well versed with economics while the bottom-up needs to appreciate the nuances of accounting. People in this camp wants everything to be explained, the cause-effect. If they did not spot the correction beforehand, its because they haven’t been giving adequate attention to certain investing variables.

Put another way:
Top-Down Investing People with a bit of economics knowledge but scared shitless about accounting Bottom-Up Investing People who knows a bit about accounting but hates fiction

Then there are the ones who embraced technicals and charting religiously. These are basically pattern seekers, they try to find pattern from historical prices. To me, these are people who have basically given up trying to understand stocks. They are basically saying there is not much point trying to understand fundamentals, its either too hard or that it doesn’t matter much really in the end. On the other hand, the patterns and data may yield more than just trends, they believe that the human psychology and the way people invest are already reflected in past data: and they tend to repeat themselves. If you are able to decipher trends, breakouts and supports: you are golden.

To be fair, there are some who employ a mish-mash strategy of fundamentals and charting in investing. Here, I am not trying to say which is the better option as most reported studies tend to come to the conclusion that it is very difficult to beat the market in the long run. People like Buffett and Lynch are explained as minor aberrations to the data. This doesn’t sound good for the average investor, does it!

Big investment houses employ highly paid quants to do analysis and highly evolved econometric models to squeeze anomalies (returns) from the market place. Quantitative finance might sound like rocket science but even they are not infallible. Just look at the LTCM and Goldman Sach’s in-house hedge fund experience.

Hence, we cannot roll our eyes if a seasoned trader said that he/she relies on market rumours or whispers to make his/her stock selection. A bull market has the effect of making almost everyone think that they have harvested the ability to be brilliant stock pickers. A bull market only made it easier to pick performing stocks.

It is probably the mystique of being successful in investing that keeps investors baffled yet attracted to the field.
I am terribly sorry that I am not able to provide a better alternative to the above. I do feel that there are strengths and weaknesses with each of the investing strategy.

If I may try to add some value, is to encourage young investors to pay more attention to behavioural finance in addition to the stuff in textbooks. It is important to understand the madness of crowds. Another point is to read up more on investing variables, examine their cause-effect relationship, and then rank them in your head in order of importance. The trouble is you can read books and watch the business programs but you will be inundated with information overload. We have to learn to rank and sift the b.s. from the things that address the issues at hand properly.

To extend on the cause-effect on investing variables, we need to go further down the chain of events. Its like a good chess player and a grandmaster. A good player may be able to think 3 or 4 moves ahead but a grandmaster can go much farther. I do think by stretching your analysis, it gives you an edge.

We need all the help we can get. As Soros rightly put it, "More importantly, it is how much money you make when you're right about the market and how much you lose when you're wrong. " To do that: we need to get the big picture right; we need to get the exit, entry and cut loss prices right; and we need to pick the right stocks with corresponding valuation and growth implied, and note them when the variables start to deteriorate. We need all the tools that will help us achieve that.