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Saturday, September 13, 2008

'Malaysia has 1st class infrastructure, 3rd class salaries'

After 50 years of development, we can say that we have one of the world's best infrastructure in terms of roads, airports, ports and even the Multimedia Super Corridor.

We only realise this when we travel overseas or to neighbouring countries or when we get visitors from the United States or Europe.

As visitors leave the Kuala Lumpur International Airport, travel on the highway, visit KLCC or the surrounding shopping complexes, they can immediately access the Internet. They all say we are better than the developed countries.

The government has done a lot in that we have a roof for every head, a desk for every school-going child, a bed for the sick and even jobs for 2.5 million foreign workers.

Lately, the government has been taking strides to improve the salaries of the government servants while businessmen have had to increase the cost of food items at groceries or restaurants.

Whilst we have first-class infrastructure, we still have Third World salaries.

While the economy has grown in the last 50 years - at six to eight per cent annually, salaries have not matched these types of growth. As such, most of the private sector companies still pay Third World salaries.

We cannot afford to measure ourselves against the McDonald's index in terms of how many people can afford to buy McDs. We can't even say we can use the Astro index in terms of how many people can afford an Astro at home, which I believe is less than 10 per cent.

It becomes worse when we say how many per cent of our population can afford to buy computers for their homes.

We can ask for first-class infrastructure but can the population afford to use it?

The key question is: Can the population afford handphones, highway tolls, computers and high taxes on cars?

As such, to keep astride with our economic growth and our super infrastructures, private sector salaries need to be increased.

It is sad that after 50 years, we still don't have a minimum salary structure and we bring in foreign workers whom we are happy to pay below RM600.

On top of this, we have 950,000 Malaysians working overseas, including 150,000 professionals, because the salary scales abroad are better.

Maybe we have to compare not only taxation in other countries, and ask the government to reduce income tax and corporate tax.

The government has done well to increase the salaries of civil servants by 35 per cent.

The private sector complains bitterly that petrol prices have gone up by 100 per cent, steel prices up by 100 per cent and food prices by 50 per cent. However, they try to contain salary increases between six and 10 per cent.

We need to have a minimum wage urgently because even at RM600, who can afford to live in Malaysia?

Just look at cost of rentals for homes and the cost of a loaf of bread for breakfast, lunch and dinner. This is even before we add the cost of transportation, amenities at home and the cost of educating our children.

In the last 50 years, salaries in Singapore have gone up by 7.5 times that of Malaysia.

Fifty years ago, our salaries and currencies were the same. Today, salaries are three times higher and the currency is 2.5 times higher across the Causeway.

Comparatively, the Hong Kong people are earning more than the Singaporeans and the Japanese are earning more than the Hong Kong people.

The government is responsible for first class infrastructure and as well as the hefty 35 per cent increase in government salaries.

Who is responsible for third-class salaries in Malaysia? Who is driving away the more than a million Malaysians who work overseas? Don't we need that human capital at home?

By Bernama

Institutional buyers to drive office property market

PETALING JAYA: The office property market will continue to hold out well with strong interest from local and foreign institutional buyers, industry players said.

Knight Frank Ooi & Zaharin Sdn Bhd managing director Eric Ooi said in the past year, the capital values of Grade A office space had appreciated by between 20% and 30% to RM1,000-RM1,300 per sq ft. Rentals grew by 20% to 30% as well to RM7.50-RM8 per sq ft.

Meanwhile, super prime office space in the Petronas Twin Towers commands rentals of between RM10 and RM12 per sq ft.

According to Ooi, institutional buyers continue to see good upside potential in capital values and rentals of quality office buildings in Kuala Lumpur and this bodes well for the market going forward.

An analyst with a local brokerage said a lot of foreign and local institutional funds wanted to hedge against inflation and were on the lookout for strategic acquisition of prime office buildings with high yield potential.

“Property investment, especially in commercial properties, is still considered the better option for high yield potential compared with investment in the lacklustre equity market,” he said.

Axis REIT Managers Bhd chief executive officer Stewart LaBrooy said with the recent budget incentive for real estate investment trust (REIT) in the form of lower withholding tax for local and foreign investors, REIT managers would be looking at more ingenious ways to enhance their asset values by making more yield accretive purchases.

The tax rate on REIT dividend received by foreign institutional investors will be slashed to 10% from 20% while for individual investors (both foreign and local), the withholding tax will be reduced to 10% from 15%.

LaBrooy said the office market, which had made substantial gains in capital values and rentals in the past 12 months, continued to offer good upside potential.

“There is no overbuilt situation for Grade A office space in the city centre and the number of transactions at new record prices underscores the positive market sentiment,” he added.

In its latest Real Estate Highlights, Knight Frank Research said the first half of this year saw several transactions on “forward purchase” basis that recorded capital values surpassing RM1,000 per sq ft.

Kuwait Finance House (KFH) entered into an agreement with YNH Property Bhd for the purchase of half of Menara YNH along Jalan Sultan Ismail for RM920mil or about RM1,230 per sq ft.

KFH was also involved in another forward purchase agreement to buy Glomac Tower for RM576.85mil, or RM1,120 per sq ft.

The latest office building in the city to be transacted is Menara Citibank in Jalan Ampang, Kuala Lumpur. The buyer, IOI Corp Bhd, is said to have proposed a price of RM573mil or RM970 per sq ft for the building.

Another building that is believed to be up for sale is Menara Standard Chartered on Jalan Sultan Ismail, which has a price tag of close to RM300mil. The front-runner to bid for the building, which is owned by Government of Singapore Investment Corp Real Estate, is said to be ING Real Estate.

By The Star (by Angie Ng)