It's another 9 years till year 2020 for Malaysia to achieve its 'developed' status. Personally I don't think we will make it but a few years later won't do us much harm. Driving for the past few years and being able to compare the transport system with Singapore and Australia, Malaysia has got one hell of a mountain to climb. Infrastructures are not yet in place and the transport system needs major changes. I'm sure politicians who recently went to visit the Hong Kong MTR would learn a lot and I hope they have done enough of their homework. We think politicians are the best people to take us forward but that is not true. Well, regardless whether they know better or not, here's my 10 pointers to implement to even get a chance for 2020.
10. Road Signs
For a country with resonable living standards, our road signs are below par. Wrong signs, missing signs, broken (incomplete) signs to semi-visible obstructed signs. There has to be changes to this. It's really a shame how motorist have to guess directions at times where signs are supposedly be placed. Some signs are covered by trees and some do not continue showing a destination after some time. There needs to a body to oversee this.
9. Bus Stops
Proper bus stops are lacking in the country and the laws allow buses and taxis to stop as they like which is dangerous for both the motorists and the passengers of these vehicles. There needs to be proper bus stops which are sheltered and safe for users. And there must be rules for proper stopping places for buses for convenience and safety.
8. Taxi System
There has been a recent reform to the taxi system where fares have been reviewed and more taxis and using the meter. The increase in fare was necessary for taxis to continue to operate with rising cost. However, there still will be taxis who are reluctant to use the meter or refuse to take passengers to certain destinations. This is still a huge problem for the taxi system. CVLB has to place certain laws pertaining to this to protect users from unfair behaviour.
7. Local Carmakers
Perodua has outshone Proton in the last few years and this comes to show Proton is even losing out to a local counterpart. The protection given to local carmakers should gradually be lifted to increase the efficiency of these companies. The quality of local cars have barely improved and people are already prepared to fork out extra for a much reliable Japanese car. The motor vehicle industry is a growing one and if they don't improve, they will continue to lose market share and eventually become unprofitable. The country has given the carmakers more than enough support in terms of sales and protectionist policies. All they have to do is make a decent car, which they have yet to.
6. Airport
A world class airport costing billions of dollars and thousands of trees, but it is under-utilised. Although there has been growth in passengers coming through KLIA, there's still big opportunities for more airlines to fly to KLIA. Our neighbours are running at capacity and there more passengers to accommodate, so please do something about it. Budget traveling has emerged in the last few years and LCCT has failed to accommodate the spike in passengers,. Govt has to make sure "KLIA 2" will be large enough to accommodate the growth of AirAsia and the other budget carriers. There must be proper and sufficient personnel, systems and infrastructure to make it work.
5. Port Klang
Singapore has the second most busiest port in the world and every one of those ships still passes Port Klang. Our location is not a disadvantage at all but our personnel has been a letdown. A potential source of large revenue if managed properly. The corruption that is happening is not an issue to discuss here. The location on the Straits of Malacca is unbelievable and we have just gave billion ounces of gold to our neighbours .
4. Learning programs
Malaysian drivers are known to be one of the worst and some blame has to be put on the learning programs. It needs to tougher, stricter and more transparent. Programs today do not create competent drivers on the road and this will deteriorate if not reformed. The only way is to completely overhaul the program and taking developed countries as an example. A safer road can save millions of dollars a year, not mentioning lives.
3. Road conditions
Potholes and damaging surfaces create hazards for driving. This will waste millions of dollars a year on repairs. Starting from major roads, there needs to certain materials laid under the roads to prevent potholes from reoccurring. Patching up pot holes every time they occur will only temporarily solve the problem and money will be spent wastefully every year. Open your eyes govt, why does other countries not have this problem, there must be something different.
2. Enforcement
Having a police officer pull you over is not such a scary or a lesson for many, in fact, it has become a joking topic over dinner conversations. Did you last hear how your friend got away with speeding or using the emergency lane? How much did the person pay? You know what I am talking about. Drivers simply feel they are bulletproof from the authorities because when the time comes they will get away with a slap on the wrist. This problem comes from all the way up to the highest levels of government. Change can only come from the top and this is not something that can happen with little effort.
1. Public transportation
Why are there so many cars on the road? Well, why not take the public transport? Oh yeah, there aren't available in my area or it will take me too long. The public transportation state is in a mess and this is probably what we should be having about 10 years ago. In simpler terms, we are 10 years behind. There should be one company running the service like in most countries and it is closely monitored by govt authorities. Now there are few bus operators overlapping each other. A timetable is unheard of and the information available to the public about transportation is limited. The KTM is a dinosaur,trains break down now and then, the bus services needs a major overhaul and the current level of service is very poor. With the cost of materials going up, it's going to be even harder to improve services.
Implications of good transportation
1) Less cars on the road, less congestion.
2) Less consumption of fuel, less outflow of national income and exposure to rising fuel prices.
3) Improves efficiency of businesses. Higher turnover rates for logistics, lower cost, which affects 99% of businesses. Less time spent on the road, more time spent working, more goods and services produced, higher GDP....
4) Lower expenditure on cars, which lowers national debt.
5) Encourages tourism.
6) Lower expenses on repairs due to accident and road conditions, less outflow unnecessarily, lower premiums on insurance, more money for everyone.
7) Increases the attractiveness of the economy due to efficiency, more investments perhaps.
8) An indication of a developed country?
9) Less money to AP holders , won't that reduce c_ _ _ _ _tion?
10) Less motor vehicles, less pollution.
It doesn't take a genius to know what I just wrote. Politicians are supposingly the most capable people to manage the country, well we all know it's not true at all, but at least do something right for once, for the country.
~deyao~
Saturday, January 29, 2011
Thursday, January 20, 2011
Make or Buy?
I learnt about this question awhile back doing management accounting and I felt this question is one of the best questions to ask yourself when making a decision. For example, you need a bicycle, make or buy? We mostly likely do not have skills and knowledge to make a bicycle so it's most likely we buy one. You are planning for dinner tonight? Eat in or out, make dinner on your own or buy it from somewhere. There's infinite examples when it comes to make or buy so I hope you get the basic idea.
A friend recently asked me why do I buy stocks/shares rather than start up a business? It came to my mind immediately it was a make or buy question. Starting up a business not only requires capital, it requires other attributes such as knowledge, management, research etc. It's certainly is not beyond a person to start a business but it is going to have a certain degree of risk. Until a person has the expertise to manage risk, the normal person usually buys. Unless you can make dinner for yourself, you do not have a choice.
Warren Buffett once said buying stocks was no different from buying a business. When you are buying a stock, you are essentially acquiring ownership of a business. Buffett as you know is a guru of buying, making his fortune in companies such as Coca-Cola, Kraft, Johnson and Johnson etc. He is one of the best examples when it comes to buying and he proves that you can actually succeed by buying. He looks for businesses with great potential and undervalued according to his analysis and buys them. His knowledge for his insurance business should also be noted.
Not every division of a great company is the best. And when it came to a video website for Google, it never took off like its other products.Google Video was nowhere. Google is the leader in the internet world and they have some of the most genius creations, but they couldn't create a successful site for videos. What did they do, they bought. They bought the world's most popular site for videos, YouTube. They paid a large sum of money for it, but it was a site they just couldn't match so they bought them out.
How about making? We've seen thousands of people creating their own companies and eventually growing them so huge and listing it in public. Robert Kiyosaki calls them the ultimate investors, people who create companies where the public wants a slice of it. People like Robert himself, Donald Trump, the Walton family (Wal-Mart), Larry and Sergey (Google) and soon to be Mike Zuckerberg (Facebook). An important term people like them like to be described as, entrepreneurs. I know there are many other prominent people I've not mentioned but you get the point. They are the king of making. Using their talents and hard work they created business worth billions of dollars. Think about Microsoft, eBay , Amazon etc, just imagine how far they can go from starting from scratch. People like them make companies and the rest of us buy them. We may not "make" a listed company one day, but rewards of a successful business can be very substantial.
So make or buy?Still a difficult decision. In terms of risk, it's a big debate. By having your own company, you decide everything that goes on and the business risk will be known and managed by yourself, there is no information asymmetry . The big question mark is expertise. If you have the expertise of making a bicycle which will cost less than the one at the shop, it should be a "make" decision. So do you have the capabilities and talents to carry out the "make" decision.
Having the expertise in buying or making can make you a lot money either way so understanding the key factors and differences is important when deciding. When you're buying a business and the business is not run by yourself, 99% of the time you would be facing agency cost. Agency cost occurs when interest of management is not in line with shareholders (owners) of the business and this will be a 'cost' to the shareholders. When you're buying a publicly listed stock, you generally do not have much control over the business and you are just hopeful the company in run properly by management and value is added to your investment.
As I mentioned, information asymmetry occurs and this can be a cost to shareholders. Management in a company generally will possess some "inside information"(non-publicly available information) which can be used to make money for themselves. Although there are laws preventing such actions, people who use this information still have means to get immunity in the form of disclosure. As a shareholder, value can be lost because insiders trade ahead of everyone and this takes a cut out of the potential profits of shareholders.
Although there are mechanisms in place such as corporate governance and employment incentives to align the interest of management with shareholders, agency cost will never be eliminated completely, which means the wealth of shareholders are transferred from them. Corporate governance has become a bigger issue lately with the collapse of big corporations, but this cannot fully solve the problems of agency especially when the directors are managers themselves or there is a lack of independence in the board of directors and management. More accountability is placed on the duties of directors but this does necessary reduce agency cost because it acts more in a form of punishment rather than being a deterrent. Thus shareholders will have to bear that risk and cost.
Almost all corporations give their employees the option to own the corporation's shares to motivate the employees. It will lessen agency cost but things like employee benefits, bonuses and perks are still coming out the pocket of shareholders. So are you comfortable with that happening?
Is agency cost minimal enough to overcome when "buying", that's probably an important question you have to ask yourself when making the decision. If you think management places too much interest on themselves, then "buying" would not be a good investment decision for you. There are many people who don't think management act in the best interest of shareholders and they stay away from the buy option. So it is up to your analysis to decide whether you can "trust" the company's management to run YOUR business. One of Buffett's most important steps to deciding on his investment is meeting with management. It is true he meets with management to see whether they are capable and dedicated enough to maximise the value of his investment. Lesson: He buys beyond the fundamentals of the business.
To succeed in your finances, you cannot avoid the make or buy decision. Some people avoid this decision completely and work for life. For the benefit of yourself, it's time to ask yourself, make or buy.
~deyao~
A friend recently asked me why do I buy stocks/shares rather than start up a business? It came to my mind immediately it was a make or buy question. Starting up a business not only requires capital, it requires other attributes such as knowledge, management, research etc. It's certainly is not beyond a person to start a business but it is going to have a certain degree of risk. Until a person has the expertise to manage risk, the normal person usually buys. Unless you can make dinner for yourself, you do not have a choice.
Warren Buffett once said buying stocks was no different from buying a business. When you are buying a stock, you are essentially acquiring ownership of a business. Buffett as you know is a guru of buying, making his fortune in companies such as Coca-Cola, Kraft, Johnson and Johnson etc. He is one of the best examples when it comes to buying and he proves that you can actually succeed by buying. He looks for businesses with great potential and undervalued according to his analysis and buys them. His knowledge for his insurance business should also be noted.
Not every division of a great company is the best. And when it came to a video website for Google, it never took off like its other products.Google Video was nowhere. Google is the leader in the internet world and they have some of the most genius creations, but they couldn't create a successful site for videos. What did they do, they bought. They bought the world's most popular site for videos, YouTube. They paid a large sum of money for it, but it was a site they just couldn't match so they bought them out.
How about making? We've seen thousands of people creating their own companies and eventually growing them so huge and listing it in public. Robert Kiyosaki calls them the ultimate investors, people who create companies where the public wants a slice of it. People like Robert himself, Donald Trump, the Walton family (Wal-Mart), Larry and Sergey (Google) and soon to be Mike Zuckerberg (Facebook). An important term people like them like to be described as, entrepreneurs. I know there are many other prominent people I've not mentioned but you get the point. They are the king of making. Using their talents and hard work they created business worth billions of dollars. Think about Microsoft, eBay , Amazon etc, just imagine how far they can go from starting from scratch. People like them make companies and the rest of us buy them. We may not "make" a listed company one day, but rewards of a successful business can be very substantial.
So make or buy?Still a difficult decision. In terms of risk, it's a big debate. By having your own company, you decide everything that goes on and the business risk will be known and managed by yourself, there is no information asymmetry . The big question mark is expertise. If you have the expertise of making a bicycle which will cost less than the one at the shop, it should be a "make" decision. So do you have the capabilities and talents to carry out the "make" decision.
Having the expertise in buying or making can make you a lot money either way so understanding the key factors and differences is important when deciding. When you're buying a business and the business is not run by yourself, 99% of the time you would be facing agency cost. Agency cost occurs when interest of management is not in line with shareholders (owners) of the business and this will be a 'cost' to the shareholders. When you're buying a publicly listed stock, you generally do not have much control over the business and you are just hopeful the company in run properly by management and value is added to your investment.
As I mentioned, information asymmetry occurs and this can be a cost to shareholders. Management in a company generally will possess some "inside information"(non-publicly available information) which can be used to make money for themselves. Although there are laws preventing such actions, people who use this information still have means to get immunity in the form of disclosure. As a shareholder, value can be lost because insiders trade ahead of everyone and this takes a cut out of the potential profits of shareholders.
Although there are mechanisms in place such as corporate governance and employment incentives to align the interest of management with shareholders, agency cost will never be eliminated completely, which means the wealth of shareholders are transferred from them. Corporate governance has become a bigger issue lately with the collapse of big corporations, but this cannot fully solve the problems of agency especially when the directors are managers themselves or there is a lack of independence in the board of directors and management. More accountability is placed on the duties of directors but this does necessary reduce agency cost because it acts more in a form of punishment rather than being a deterrent. Thus shareholders will have to bear that risk and cost.
Almost all corporations give their employees the option to own the corporation's shares to motivate the employees. It will lessen agency cost but things like employee benefits, bonuses and perks are still coming out the pocket of shareholders. So are you comfortable with that happening?
Is agency cost minimal enough to overcome when "buying", that's probably an important question you have to ask yourself when making the decision. If you think management places too much interest on themselves, then "buying" would not be a good investment decision for you. There are many people who don't think management act in the best interest of shareholders and they stay away from the buy option. So it is up to your analysis to decide whether you can "trust" the company's management to run YOUR business. One of Buffett's most important steps to deciding on his investment is meeting with management. It is true he meets with management to see whether they are capable and dedicated enough to maximise the value of his investment. Lesson: He buys beyond the fundamentals of the business.
To succeed in your finances, you cannot avoid the make or buy decision. Some people avoid this decision completely and work for life. For the benefit of yourself, it's time to ask yourself, make or buy.
~deyao~
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