Amazing Yakult Ladies

Sumarni, a 39-year-old Indonesian mother of three, trundles her pink bicycle through a wealthy Jakarta suburb every day, hawking Yakult probiotic yoghurt drinks door-to-door.

 

Dressed in a red-and-white checked shirt with matching trousers and hijab, she is one of about 5,000 “Yakult Ladies” spearheading an expansion drive in Indonesia by the quirky Japanese company that makes the drinks.

 

Booking sales, however, is never easy. “It is hard to sell to the A-class customers because their security guards and maids won’t let us speak directly to them,” she explains.

At Yakult’s low-rent distribution centre in Cipete, south Jakarta, the walls are plastered with posters displaying sales patter to be used in every conceivable situation from when a potential customer is reading the Koran to when they are cooking dinner.

The company tries to keep morale high through a daily midday meeting. The agents pray together and chant corporate slogans (“Keep going, each time higher” and “Yakult should be delivered whether it’s boiling hot or pouring with rain”) before a hitherto quiescent Japanese executive strides to the front of the room and pumps his hands in the air, shouting “Ganbaru”, a Japanese slogan that means “tough it out”.

 

The push is part of a wider effort to tap emerging markets as sales stagnate at home. There are now more than 80,000 Yakult agents around the world, including more than 40,000 in Japan. They act as brand ambassadors as much as sales agents with their neat uniforms and pushcarts adorned with dictums such as “love your colon”.

Yakult was launched in the 1930s after Minoru Shirota, a microbiologist at Kyoto University, cultivated a strain of bacteria that was strong enough to survive stomach acids and pass through to the intestines, where he claimed it had a positive effect on digestion and health.

 

The company has since been promoting its idiosyncratic philosophy of “Shirota-ism” which combines the concept that “a healthy intestinal tract leads to a long life” with the idea that the company should sell its products at “a price anyone can afford”.

 

Sanae Ueno, head of Yakult in Indonesia, says the ideal Yakult Lady is aged over 30 and has children – because mothers tend to be more “health conscious” and have a good network of other women to target as customers.

 

The key for Yakult is hiring women who understand the local culture, can communicate well and who will keep to a regular schedule. It asks new recruits to draw up their own maps of their neighbourhoods, broken down by socioeconomic groups.

 

Yakult wants the Ladies to have ownership of their weekly routes, but it also monitors their performance closely, with each woman’s sales figures tallied on a wall in every district office.

 

The most successful Yakult Ladies, such as 43-year-old Sumarti, enjoy their job, stopping to natter with people. But, like in any sales role, they also need a deep well of persistence.

 

“Before, it was hard to find work because people thought I was too old. Doing this job has helped me send my two daughters to school,” she says.

 

“But it can be very hard sometimes when people refuse to come to the door.”

Almost 10 per cent of Yakult’s global sales of its trademark shot of sugary fermented milk now come from Indonesia. The company plans to continue relying on the Yakult agents to help it expand in the world’s most populous Muslim nation.

The Yakult agents entered the story in the 1960s when the company followed in the footsteps of Nippon Insurance, which had tapped the large pool of widows from the second world war to create a door-to-door sales force of respectable women in need of employment.

Initially, at least, selling the digestive merits of bacteria required the same sort of persuasion as pitching an insurance policy. “When people thought of bacteria, they thought of something harmful,” says Takashige Negishi, Yakult’s Tokyo-based president. “A proper explanation was essential.”

Today, some countries are given a more Yakult Lady-centric sales model than others: in the US, with its high proportion of two-income households, the company found that not enough people were at home during the day to bother.

 

Maintaining a local sales network with personal ties to customers can also help in times of turmoil. In China, Yakult’s sales increased by a quarter last year in spite of protests against Japan and boycotts of Japanese brands, the product of a heated territorial dispute between the two countries. Yakult has three factories in China and is building two more. “We have local people selling and it’s perceived as a made-in-China product,” Mr Negishi says.

Even so, getting the localisation formula just right can be difficult. When Yakult first tried to replicate the “Yakult Lady” model in Indonesia in the 1990s, it found the going tough.

“Until we restarted our business in 2007, we found that we would employ 100 Yakult Ladies and that after one year, 100 would have resigned,” says Sanae Ueno, who has led Yakult in Indonesia for 14 years.

 

How the ‘Yakult Ladies’ are transforming sales of the probiotic yoghurt drink in Indonesia

To incentivise the women, they were only paid in commission. But with little education about the product or door-to-door sales techniques, most could not sell enough Yakult to make a living.

While Indonesia’s economy started to take off in the early 2000s, after it had recovered from the Asian financial crisis and the concurrent political collapse, Yakult struggled to increase its sales and more than 10 per cent of its stock typically had to be thrown out.

The company started to turn round its fortunes after a revamp in 2007 focused on better training and management for the Yakult agents. The area that each agent covers was cut from 2,000 to 1,000 households to ensure they could visit almost every home once a week and maintain a regular rapport with residents.

And the training programme was beefed up substantially to ensure that the agents were able to generate the incomes that were needed to persuade them to stay on.

Since 2007, sales of Yakult, which costs Rp7,500 ($0.66) for a pack of five 65ml bottles in Indonesia, have jumped from about 1m bottles a day to about 3m in spite of several price increases.

About half of sales now come from the Yakult agents, up from about a quarter five years ago. The company is building a second factory in Indonesia, in Surabaya, east Java, to meet rising demand.

The rate of Yakult agent turn­over has fallen to just 2-3 per cent a year as the women now typically earn Rp3m-Rp4m a month in Jakarta, well above the minimum wage of Rp2.4m.

As she carefully tots up her sales in a little blue book issued to all the Yakult agents, Ms Sumarni, who has been working at the company for more than a decade and currently earns Rp4m a month, says she is keen to stick around.

“Until recently I was getting a bigger income than my husband but then I helped find him a better-paid job as a driver for one of my regular customers,” she says.

 

With a paucity of employment opportunities for married Indonesian women such as Ms Sumarni who do not have an advanced education, the company knew there was an opportunity to deploy its Yakult sales force. But it took the company almost two decades to work out how.

Now, as Yakult targets other growth markets such as Brazil and Mexico, Indonesia has become a model for matching its global products and marketing to local realities.

Small Business Leadership Essentials

Improve listening skills
Stow the headphones, keep your office door open and engage with your workforce. "If you lose the human connection you're in trouble," says Hewertson. Face-to-face communication is paramount. Email and other forms of electronic communications, even real-time instant messaging, mask a ton of non-verbal information. (That "Grats!" can conceal a snarky smirk or an epic eye-roll.) But striking up a conversation is only the start of engendering awareness.

"Listen deeply," she says. Focus solely on your colleague and listen intently. Resist the temptation to check your iPhone or otherwise multitask.

The act of making that colleague the center of your universe for a few moments shows that you're "honoring her, that's the only person that you're listening to," says Hewertson. And that goes a long way toward fostering a responsive and collaborative workplace.

Show some empathy
"Nothing personal" has become a popular refrain in business, but a leader's job, in large part, is to manage relationships and people—a task that is as personal as it gets. Put aside the org chart for a moment and put yourself in a subordinate's position. What are their ambitions and goals? How do they feel about their role within the organization?

If something matters to them, make it matter to you. As a leader, if I'm "willing to understand your perspective, it increases my awareness about you," says Hewertson.

Bridge the details and the big picture
In her years coaching leaders, Hewertson has observed an interesting phenomenon. Creatives generally focus on the big picture first and work to realize their vision. Coders, she noticed, are more detail oriented. "They want to understand the pieces and parts first, and then tie them to the big picture," she says. "It's an awareness that most leaders don't have."

Remember this when you interact your workers. Often, managers and employees will talk past each other because they're approaching a project from different perspectives, which can stall momentum. Take a moment to discern if your team members are focused on the details or the big picture. Listen, adjust your strategy, and deliver your insights and support "in their language," recommends Hewertson.

Be accessible to your employees
There's no getting around it, effective leaders are visible leaders. Sure, email, IM and social networks have revolutionized business communications. Distressingly, many managers "are way too dependent on electronic communication and have lost personal contact," says Hewertson.

The solution: "Walk around and pay attention to what's going on," she says. Observe your employees. Are they having a good time? Are they interacting with one another?

Ask more questions and blab less. Get to know your workers and what they love doing. Solicit constructive criticism, challenge your assumptions, and ask how you can help them accomplish their goals.

In short order, a little legwork and engagement will help make you an aware and effective boss, not some cipher that issues directives from behind closed doors. "It makes you visible, makes you more accessible," says Hewertson.

Sustaining Leadership

Show that the global trends are all in one way or another related to sustainability and raise the awareness that sustainability is not only a business opportunity, but the only choice.

Help leaders to step into the unknown, go beyond their comfort zone and create business opportunities out of sustainability challenges.

Create meaning and open up minds to new questions by fostering reflection and dialogue – accessing one's own humanity is a prerequisite for leading towards sustainability.

Demonstrate practically how collective intelligence works in fast and efficient problem solving.

Teach leaders the art of engaging with stakeholders as a cornerstone for successful collaboration while working on real issues leaders are dealing with.

Show that complexity is the future normality and teach leaders how to juggle with it successfully rather than fight or reduce it.

Offer leaders the experience that innovation is not something allocated to specific people but a competence leaders must both harvest in themselves and foster in others. For this they encourage inventiveness and iterative learning.

Foster essential skills for adaptability including seeing change as inevitable and finding ways to partner with it.

Illustrate practically how mutual support rather than competition helps perform better.

Communicate that personal mental and physical balance are part of sustainability and equip participants with tools to get this back on their agenda regularly.

Medical Insurance - Friend Or Foe

Medical Insurance functions as a form of protection to cover unforeseen expenses arising from illness, injury or accidents. Medical Insurance also ensures that you won’t have to fret about the cost of seeking treatment during an emergency. In addition, it also provides you with a stream of income while you undergo treatment.

There are 4 major types of medical policies:Medical Card are normally sold as a rider (supplementary benefits) to the main policy. The policy are yearly renewal (usually up to age 80) and premium rate is not guaranteed.
* Medical Card/Health Card – covers hospitalization and surgical benefits
* 36 Critical Illness or Dread Diseases Insurance – a lump sum benefit
* Disability Income Insurance – stream of income when you are unable to work
* Hospital Income Insurance – provides a specified sum of money on a daily, weekly or monthly basis if you are being treated in a hospital

Medical card / Health cardGovernment hospitals offer emergency and essential medical care but there is usually a long waiting list. Possession of a medical card will be able to give you more choices to both government and private hospitals. The normal maximum expiry age for medical card is 80 - an age where you need insurance most - but will no longer entitle to the protection in a Catch 22 position.
Where can I get medical insurance?Medical Insurance products are mainly offered by insurance companies. You can purchase medical insurance from various distribution channels - agents, brokers, online, banks, Post Office etc

How Much does it cost? Insurance companies and banks provide a few plans for you to choose from, based on your budget and needs. The longer the list of medical benefits provided, the higher the premium (insurance fee) will be. Premiums will vary based on various factors like age, occupation, health record, gender, and whether you are a smoker or non-smoker. Those with a higher risk potential will be charged with higher premiums and/or limitations.

High Premiums
Medical Card premiums are not guaranteed. Premiums increases with age. A man age 70 pays as much as 10 x the premium rate of a man age 30 for the same plan/scheme (for example - age 30 pays RM1,000 compared with age 70 paying RM10,000 premium per year). Yearly renewal insurance plan (like Medical Card) is specially design to eliminate older age group from the insurer's portfolio (since the older age group possess higher risk and lower profit to insurer) by increasing the premium to the extend that the policyholder cannot afford to renew the policy.


Panel hospitalA panel hospital is the hospital collaborating with the insurance company. All the expenses incurred by the insured are directly payable to the hospital from the insurance company; you do not need to worry about preparing and submitting claims. Depending on the insurance company, the number of participating hospitals varies. Choosing a medical card with more participating hospitals benefits you better.

Higher Expenses Using Medical InsuranceHospital normally vary their charges based on the Room & Board you requested plus insured versus non-insured. For the same treatments, medicines, doctors and specialists etc - the general rule is to charge more on those insured as compared to non-insured patient (since insurer is paying the cost). In addition, the rate will increase if you are staying in single bedded room versus double (four or 6 bedded room).

Co-insuranceSome medical cards practice co-insurance, meaning that you’ll have to pay a certain amount of the medical fees, normally at 10% – 20% of the total medical fees incurred, while the balance will be paid by the insurance company. Another similar option is Deductible per disability, which is also the amount you have to bear before the insurance providers pay the claim for you. The difference is that deductible per disability is a stated amount (not a percentage), and only the amount exceeding this deductible amount will be payable by insurance providers.

Zurich Life Abandons Agent

A decision by Zurich Insurance to stop selling life insurance products in Hong Kong through agents from the end of this year has raised the prospect of a major shift in the city’s HK$75 billion life assurance market.

Many local insurance companies rely on agents to sell products, which in the past resulted in battles between companies to lure top salesmen to their teams.

But in recent years, some insurers have diversified their sales channels to include independent financial advisers (IFAs), banks and direct marketing online or over the telephone.

While most now use a combination of channels, none have yet gone as far as Zurich, which recently announced it plans to dismiss all of its 700 life insurance agents by the end of this year.

Instead, it will rely on brokers and IFAs to sell its products.

“Despite our focus on growing the tied-agency channel for many years, it has not achieved sustainable scale,” Zurich told the South China Morning Post.

“We believe IFA distribution can provide the broadest and most appropriate solutions for our targeted customers to fulfil their protection, wealth management and retirement needs.”

Kisson Lau, executive director of IFA firm Noble Apex Advisors, said insurance companies need at least 2,000 to 3,000 agents to be competitive.

He said additional regulatory requirements in the city had increased the paperwork load for life insurance sales by about 30 per cent. Even with a small agency team, the company still needed to rent offices for the agents and offer them training and equipment

 

Lau expects to see consolidation in the industry as insurance firms and brokers grapple with higher operating costs and a more demanding sales environment. To help cut costs, some insurance firms have relocated sales teams to Kwun Tong and Kowloon Bay, where rents are lower than they are on Hong Kong Island.

A person familiar with the situation said Zurich’s team of agents was too small to compete with those of other big players such as AIA, which has about 9,000 agents; Prudential, with 6,000; Manulife, with 5,500; and AXA, with 4,000.

Zurich tried to expand its team beyond 1,000 agents but had trouble retaining talent, the source said. At the same time, the firm saw that product sales through third-party brokers were increasing.

Another source said Zurich was known for offering an uncompetitive salary package. In general, agents in Hong Kong get paid a small base salary, averaging HK$6,000 to HK$8,000 per month, with the majority of their income coming from commissions.

“Even with a small agency team, the company still needed to rent offices for the agents and offer them training and equipment,” an industry source said.

“The cost is relatively high for a smaller agency team, as they are not big enough to enjoy economies of scale.”

By choosing to sell only through third parties, Zurich will be looking to cut its overheads.

When selling through third parties, insurance firms need to ensure their products are attractive enough to stand out amid the competition, as brokers will normally present a variety of different products to clients for comparison.

According to the Office of the Commissioner of Insurance, there were 621 insurance brokers and IFAs on September 30, employing 9,171 licensed staff.

Be Your Own Boss

Do you dread Monday mornings and spend all week daydreaming about quitting your day job to become an entrepreneur? It might not be as easy as it sounds, but there are certainly some benefits to starting your own business.

Not everyone has a skill set that can be built into a business. And some businesses require bricks and mortar and a good deal of structure, particularly retail. But if you think there is an idea or a skill you could shape into regular profit, here are a few thoughts that might help motivate you to spring to action and follow that dream of being your own boss!

Love your job
Turn that hobby you love so much into your dream job! Running your own business can be an opportunity to choose to do the kind of work you enjoy most. You can create your own custom position description, and while there may be the odd job that doesn’t delight you, you can fill your workload as much as possible with the types of tasks you fancy. Build a business out of your passion!

Location independence
If you’re doing the kind of work that doesn’t require you to be face-to-face with your customers every day, you can work from an office space, a café, your backyard, or even a holiday destination.  With WiFi available in most locations or with mobile broadband on your device, you can set up a portable office almost anywhere in the world! The option of variety in your work environment could help keep you motivated and energised to make your business a success.

You’re your own boss
If you start your own business it’s unlikely anyone will be above you in the management hierarchy. You’re the boss and that will provide you with some pretty good job security! You also get to make all the hiring decisions, so you can ensure that you’re going to be working with people you get along with really well. It’s an opportunity to build a great team and lead them to success!

Set your own deadlines
In a big company, people often rush each week to have their work completed by 5pm on a Friday afternoon. But when you’re working in your own business, you can choose your own deadlines. Maybe you’d like to finish a piece of work later in the evening, or after your favourite TV show. Or maybe you want to take a weekday off, and finish your work on a Sunday – there can be a lot more flexibility to make those decisions when you are your own boss!

Reduce travel times
If you choose to work from home, you can cut out your daily commute entirely. Get straight out of bed and start working without worrying about traffic jams or public transport timetables!  Even if you need to leave the house for work, running your own business will provide you with more opportunity to choose a work location closer to home.

A Random Act Of Kindness

As a “bagger” at my present job at Gloucester’s Market Basket, I sometimes have to deal with demanding customers. But I witnessed an event that more than made up for them, and, frankly, left me somewhat misty-eyed.

Evidently, there was a glitch in the state-funded food stamp program on a recent Saturday, and throughout the day there were periodic broadcasts announcing that EBT cards and payments could not be processed.

Many in this community, myself included, have been affected by recent economic turndowns and the partial government shutdown. I was bagging a cartful of groceries for an older couple when they pulled out their EBT card to pay. When informed that the system was down, they sadly realized, without complaint, that they had to abandon what appeared to be their next week’s sustenance.

They were walking away when an anonymous lady — and a lady she indeed proved herself to be — approached the cashier and said, “I’ll take care of their bill for them.” She paid for their groceries without blinking an eye or expecting any accolades. She quickly thereafter left without giving her name. The couple were stunned, as were all who witnessed this lady’s act of generosity.

I overheard the couple say that they wished they’d gotten the kind lady’s name so they could at least send her a note of thanks. She was close by and I pointed her out to the gracious couple. They were within earshot and I overheard their conversation, to wit: the kind lady wished to remain anonymous and required no reward other than the remark: “Just pay it forward.”

I hope that this kind lady gets to read these words in the Times with a smile on her face. And may her “paying-it-forward” come circle ten-fold.

Employee Insurance Protection

Without an adequate amount of funding, insuring the entire staff can really eat up the budget, which creates a slew of other problems if not handled correctly. However, as expensive as life insurance may be, offering it to your employees proves advantageous in many ways.

 

Security

Life insurance not only keeps your employees safe and secure, but you as well. As a business owner, you’re liable for the well-being of your staff, and if an accident happens on the job, you could potentially lose out big time monetarily. Fortunately, with accident insurance you can better prepare yourself for workplace mishaps, and provide care for anyone injured at work.

Example: If one of your employees is significantly hurt on the job, odds are they will have to take a short leave of absence. During this time they’re likely to miss out on some hours and thus lose some money. But, if you offer workers’ compensation, you can help them pay off their hospital bills and also prevent them from suing you.

If you’re a newer company with a small staff, losing an important employee, not to mention getting sued, can be extremely damaging. However, if you take the right precautions beforehand, you can better prepare yourself for workplace accidents and avoid a lawsuit.

 

Legitimacy

With more and more new businesses popping up every day, it can be hard to stand out against the competition. No matter what your company does, one of the best ways to draw in potential employees is by providing benefits packages for them upon being hired. These packages give you a sense of legitimacy and greatly encourage people to come work for you.

Example: Companies that offer benefits packages are highly sought after. For many people without proper life insurance, being insured by their employer is the only way they can afford it. So, if you plan on growing as a company and attracting a dedicated staff, providing life insurance is a great way to get people interested and in the door.

It’s one thing to start a business; it’s another to start a business that people want to be a part of. Offering life insurance and other perks for your staff is one way that you can do that. It also demonstrates your seriousness as a company.

 

Nobility

Although life insurance is often underappreciated, it’s still an excellent way to show your employees that you value their wellness. Promoting a healthy lifestyle at work and providing insurance for your workforce not only keeps them safe while on the clock, but also encourages them to adopt these safe practices at home.

Example: At the end of the day, a safe and healthy staff is a happy staff. By encouraging them to choose healthier alternatives, and seek adequate healthcare, you can greatly reduce the amount of sickness in the workplace. You’ll also demonstrate to them that you want them to be healthy and are willing to do whatever it takes to ensure it stays that way.   

If you’re a small business owner still on the fence about whether or not to provide life insurance for your employees, consider the advantages. It will allow you to keep everyone safe at work, it will protect your company if a disaster was to happen and it demonstrates to your employees that you care about their well-being. You may have to revise your budget, but the potential benefits are definitely worth it.

Discrimination On Genetic Testing

Lead author Dr Louise Keogh from the School of Population and Global Health at the University of Melbourne said “This case presents evidence that life-insurance companies have made incorrect risk-assessment judgments based on genetic information.”

“In addition, we have previously found that the fear of such discrimination can act as a deterrent to genetic testing.”

Published in the Medical Journal of Australia (MJA) today, the authors are calling on a more collaborative approach between industry, government and researchers to address these issues.

The case study published revealed that James (pseudonym) in his early 20s, was denied full life insurance cover because he revealed that he had discussed genetic testing with a genetic counsellor.

He was later tested and found to carry a mutation in the MSH6 gene; after disclosing this, he was denied cover for cancer by two other life insurance companies.

Unsatisfied with the insurance companies’ risk assessments, and based on his understanding that regular colonoscopy screening significantly reduced his risk of cancer, James made a complaint to the Australian Human Rights Commission.

Dr Louise Keogh said, “After informing the third insurance company that he had done so, he was offered full coverage, which suggests that the company did not have actuarial data to justify its decision.”

Professor Margaret Otlowski from the University of Tasmania said “This case provides evidence of the high level of initiative and proactivity required for a consumer to achieve a fair result. Few Australians would be in a position to pursue the level of research and advocacy undertaken by James (a professional with scientific training).”

“It demonstrates the need for further conversation and action on the use of genetic test results by life insurance companies.”

SOCSO

A guide on Social Security Organisation (SOCSO) with the types of contribution and some of the benefits you might receive.

Types of Contribution
First category (employment injury scheme (EIS ) and invalidity pension scheme IPS ) — For employees below 55 years of age. The contribution is paid by both the employer and employee for EIS and IPS.

Second category (EIS only) — For registered employees above 55 years of age and still working; newly regi stered employees above 50 years of age; and for a previously insured person receiving invalidity pension who is still working and receiving wages which is less than one-third of the average monthly wage before invalidity. Under this category contributions are only paid by the employer for protection under the EIS.

Rate of Contribution
For the employment injury insurance scheme and the IPS, the employer pays 1.75% of remuneration up to a maximum of RM51.65 a month, while the employee pays 0.5% of remuneration up to a maximum of RM14.75 a month. This maximum is hit when wages exceeds RM2,900.

For the IPS only, the employer pays 1.25% of remuneration up to a maximum of RM36.90 a month, with no deduction from the employee. For ease of calculation, the exact contribution is slightly different from the intended 2.25% and 1.25% above, whereby contributions are determined in a tabular form depending on the level of wages.

Benefits
Depending on the type of scheme you are subscribed to, there are different benefits. However, there are three benefits that are the same no matter which scheme you are under:

Rehabilitation benefit. Facilities for vocational and physical rehabilitation are provided free of charge to an employee who suffers from invalidity as a result of a workplace accident.

All expenses incurred for these purposes will be borne by SOCSO based on rates and conditions determined by SOCSO. Physical rehabilitation includes:
• Physiotherapy.
• Occupational therapy.
• Reconstructive surgery.
• Supply of artificial limbs such as artificial leg, hand, eye, and dentures.
• Supply (as well as repair and replacement) of other orthopedic equipments such as wheelchairs, crutches, hearing aids, spectacles, calipers and orthopedic shoes.
• “Return to Work” programme. • Dialysis treatment for an employee receiving invalidity pension and suffering from a chronic kidney ailment.

Vocational rehabilitation includes vocational training in courses such as electrical wiring, tailoring, radio/ TV repairs, metal trade, refrigerator and air-conditioner repairs, plumbing, typing and secretarial work.

Funeral benefit. An amount of RM1,500 will be paid if an employee who was receiving invalidity pension dies for any reason. Payments will be made to the eligible next of kin; the benefit will be paid to the person who incurs the funeral expenditure. The amount paid will be the actual amount incurred or RM1,500, whichever is lower.

To apply and receive the cash benefit, the following documents and their certified copies must be completed and submitted:
• Claim form (Form 26).
• Death certificate.
• Other relevant documents which certifies the next of kin (bring along the original documents for SOCSO’s verification).

Education benefit. Dependents of an employee who is receiving monthly benefits from SOCSO may apply for certain education benefits in the form of loans of scholarships.

Unremarkably Average

11 ways to be unremarkably average

Everyone wants to achieve great things and imprint their life in the history. However, only the minority of them devote sufficient effort to achieve their dreams. Gavin Aung Than, freelance cartoonists based in Australia illustrated this social phenomen in one of his mind blowing drawing cartoons. Following cartoon illustrates quotes and worldview of Chris Guillebeau, an inspiring entrepreneur and writer, who helps people to follow their passion and find a meaningful way to use their talents.
So, have you found yourself in this cartoon?

Work Smart

Work where you work best
If your company allows you to be flexible and work from home or a place where you can concentrate best, then do so. Many managers and workplaces are now embracing flexible working options for staff. A recent Regus study surveying 20,000 professionals from 95 countries, found that 75% of executives believe that flexible work improves productivity and fosters creative thinking. The study also showed that 72% of workers reported that productivity is a direct result of flexibility and enables better quality (65%) decision making.

Managers - schedule less meetings
Planning a one hour meeting involving 10 people is actually the same as planning a 10 hour meeting, and is likely to be a waste of company time, money and resources. When you announce a meeting, you're likely to be interrupting the creative process of many of your employees.

'Come up for air' and check your email periodically
Being engaged in a focused creative or practical task is very similar to the sensation of scuba diving. Many people experience a sound blockout while they're working in this state, where noises and distractions grow dim. But like scuba divers, whose oxygen tanks have a time limit, you have natural breaks in this focus - like a diver swimming up to the surface. While you're in a 'surface' period like this, use the time to connect with the world again. Check your emails, shoot through a few replies, and make that phone call.

Listen to music while you're working
Office banter can be distracting, so if you need to focus (and if your office allows it), plug in your earphones and listen to music. Some people prefer classical music because there is usually no singing or lyrics to distract, while others like mindless pop or rock with a strong back-beat. Whatever works for you!

Switch from active forms of communication to passive forms
Instead of walking across the office and interrupting someone's train of thought just to ask a question, consider emailing or instant messaging them if it's not urgent. That way they can respond in their own time, most likely during one of their 'surface' periods of reduced productivity.

Do the dreaded task first
There is nothing worse than having the thought of an unpleasant task hanging over your head all day.
If you have to sort out the filing cabinet or read over the pile of resumes on your desk, then do it first thing. You'll have the rest of the day to focus on other tasks, and will most likely find that you're more productive as a result.

Break it up
Some people have creative jobs that require huge blocks of time, but other jobs are different. If your job has the tendency to become monotonous, break up your day into 20 minute chunks, interspersed with a few minutes of physical activity like filling up your water bottle, going to the bathroom, or going for a quick walk to the park.

Sometimes today is not your day
There's nothing worse than headbutting a task until you pass out. If you're not getting anywhere with a project and you have time to spare, leave it until the next day. Rest, exercise and a full stomach can do wonders to change your outlook. Do it first thing the next day though, and make sure you leave yourself a post-it reminder.

Remember the good stuff
Keep a folder of positive feedback and comments received from your colleagues and superiors. Look over it when you're feeling discouraged or unappreciated to give yourself a confidence boost.

Sharpen your mind
Keep your mind fit and sharp by reading, watching or listening to something that challenges your ideas and beliefs everyday. Learning new things and practising divergent thinking is like doing push-ups for the brain.

EPF Changes

Malaysia's largest pension fund has decided to raise the minimum savings for its contributors to ensure they have more money in their twilight years, but this indirectly cuts investments into the country's vibrant unit trust industry.

The new rules by the Employees’ Provident Fund (EPF) to cut investments in unit trusts comes at a time when rising costs have shown contributors' savings are not enough to cover retirement after turning 55, five years below Putrajaya's new retirement age of 60.

“The EPF will revise upwards the basic savings quantum of its members to RM196,800 by the age of 55 effective January 2014, to ensure enough savings to finance members' retirement needs,” EPF general manager, Nik Affendi Jaafar told The Malaysian Insider in Kuala Lumpur over the weekend.

 

He revealed that under the old scheme, which was launched in 2008, members' targeted savings of RM120,000 at the age of 55 was not sufficient for them to maintain their lifestyle during retirement.
But the new amount will be equal to RM820 a month for 20 years from age 55 to 75.

The new rates are said to be benchmarked against the minimum pension for public sector employees, which is currently at RM820 a month, so that the monthly retirement income does not fall below the poverty level.

Following the revision, members need to have more in their Account 1 to be eligible for the EPF Members Investment Scheme, under which savings are invested in unit trusts. Currently members can use 20% of their balance in Account 1 to invest in approved unit trust schemes.

To illustrate the change, if a member is 40 years or older and has basic savings of RM80,000 in Account 1 at present (2013), his excess will be RM36,000 (derived from RM80,000 - RM44,000). He can then use only RM7,200 (20% of RM36,000) to invest in any approved unit trust. To further protect EPF contributors, withdrawals for unit trust investments are only permitted once every 3 months.

With the new EPF rules in 2014, at RM80,000, the excess will only be RM11,000 (RM80,000 - RM69,000). One can then only use RM2,200 (20% of RM11,000) to invest in any approved unit trust.

An official from the Federation of Investment Managers (FIMM) who spoke on the condition of anonymity said that the unit trust industry would be severely affected by the new ruling.

The RM326 billion unit trust industry comprises some 50,000 consultants who earn commissions ranging from 1% to 3% from unit trust investments.

The new ruling would also result in many EPF members, who were previously eligible to invest in unit trusts, no longer being qualified.

One of the leading Unit Trust Management Companies, Public Mutual (a subsidiary of Public Bank), derived one-third of its non-interest income from its unit trust operation. In 2012, less than 10% of its net profit was from its unit trust business.

Who Is Ruby Bridges

HER hair neatly tied back and her white socks folded over above clean black shoes, Ruby Bridges looked anything but a revolutionary. But that's exactly what she became. At just six-years-old Bridges became the first black child to attend the white only William Franz Elementary School in New Orleans.
 

She arrived at school on November 14, 1960 and was escorted into the school by Federal marshalls, as angry parents and citizens screamed abuse outside. After she was escorted inside, hordes of parents rushed in to remove their children. More than 500 children were taken out of school that day.

"I remember turning onto the street. I saw barricades and police officers and people everywhere. "When I saw all of that I thought it was mardi gras. I had no idea they were here to keep me out of the school. I wasn't (afraid). My parents said 'Ruby you're going to a new school today and you'd better behave'. "Once I got in the school all of these people rushed inside the building. They were taking out their children. Over 500 kids walked out of school that day."

Six years earlier the National Association for the Advancement of Colored People (NAACP) won a legal victory against the Board of Education which ruled that segregated schools were unconstitutional. For years afterwards many schools refused to integrate, until the day Ruby walked into William Franz.

Ruby was recently interviewed for a PBS series The African Americans: Many Rivers to Cross. She still lives in New Orleans where she worked for some time as a travel agent. She also chairs the Ruby Bridges Foundation which was formed to promote "the values of tolerance, respect, and appreciation of all differences".

Although her family suffered as a result of her attending the school, her attitude now is one of forgiveness. "They didn't see a child. They saw change and what they thought was being taken from them. They never saw a child."

             

 

  

 

Who Is KS Bawani

Law undergraduate K. S. Bawani, of the "listen, listen, listen".

Bawani shot to fame early this year after a video of her exchange with Sharifah Zohra Jabeen, president of activist organisation Suara Wanita 1Malaysia (SW1M).

The video showed Sharifah Zohra haranguing Bawani with the now infamous line - listen, listen, listen - after the undergraduate had questioned her about her anti-opposition bashing during a forum at Universiti Utara Malaysia last December.

 

Sharifah Zohra, who was a speaker at the forum, had interrupted Bawani when she was posing her question and snatched the microphone from her before launching into her tirade, which included associating human problems with those of animals.To date, Sharifah Zohra has refused to apologise to Bawani.

Mismatch Human Capital

Malaysia's plans of turning Kuala Lumpur into a major financial centre which can rival the likes of London, New York, Singapore and Hong Kong will remain a pipe dream if it does not address the challenges associated with the supply of skilled human capital.

Online portal The Conversation recently reported that Malaysia's poor scores in assessments by international students, declining language capabilities and persistent concerns over the employability of graduates did not augur well for its ambitious plans.

“The government may be able to build world-class facilities in Kuala Lumpur and attract international companies to operate in the new district by offering tax breaks and other incentives.

However, without a supply of educated, English-speaking workers, hopes of challenging regional neighbours in Hong Kong and Singapore will remain a dream.

 

The portal said that Malaysia has announced bold plans to transform Kuala Lumpur into a major financial centre to raise the capital's profile and spark greater international trade and investment.
It referred to a newly proposed financial district, covering 70 acres and featuring 11 new buildings with 25 floors or more, dubbed the "Asia's Canary Wharf".

Also known as the Tun Razak Exchange (TRX), Putrajaya believes this project is the foundation on which Malaysia will be able to compete with regional financial superpowers such as Singapore and Hong Kong.

The Global Financial Centres Index (GFCI), a research-informed survey on the competitiveness of a range of cities worldwide, highlighted the challenge that awaits emerging centres such as Kuala Lumpur.  In its most recent rankings, Kuala Lumpur dropped a place to 22nd globally, but was still in Asia's Top 10 list.

London and New York are already way ahead of the pack, Singapore and Hong Kong are in strong positions, and Shanghai and Shenzhen have already shown their respective dynamism. Gaining ground on the superpowers will be tough for Malaysia.

The GFCI also said that the TRX may be a step too far unless it adopts a niche approach and builds on Malaysia's established strength in the rapidly growing Islamic financial marketplace.

It is Islamic finance which gives Malaysia the advantage over neighbouring financial centres and those mapping out the country's future would be wise to take note. If Malaysia is to join the top flight of international financial centres, it must leverage its status as an established Islamic finance hub.

Bank Negara has revealed that Malaysia's Islamic banking assets total US168.4 billion (RM555.7 billion), which is a quarter of its banking system. This accounts for over 10% of the world's total Islamic banking assets.

Mismatch Under Islamic Finance

Finding a job is often harder than expected for graduates hoping to enter Malaysia's Islamic banking industry, the world's second-largest with $124 billion (RM390 billion) in assets - employers are proving choosy about qualifications.

Thousands of students, a large number of them Muslims from across the globe, have flocked to the many Islamic finance courses offered in Malaysia, seeing them as springboards to a career.
Malaysia has an estimated 50 course providers and 18 universities which offer Islamic finance degrees, and it boasts the largest academic output globally.

 

The country has published 169 research papers on Islamic finance in the last three years, according to data from Thomson Reuters.

But while the Malaysian Islamic banking industry's output in monetary terms is growing about 20% annually, employment in it is expanding at less than half that rate - even though an additional 22,400 jobs are needed to support the growth, according to a blueprint for the financial sector prepared by the central bank.

Malaysia is experiencing a problem faced by Islamic finance sectors around the world: training and qualifications often do not provide the levels of specialism and sophistication that employers need.
The problem is limiting growth of the industry and, some say, stifling innovation that is necessary to bring Islamic finance fully into line with religious principles, and prevent its products from merely being pale reflections of conventional financial instruments.

A common misunderstanding of these young graduates is that they believe there is such a thing as a generic job in Islamic finance. In reality, the industry is looking to employ specialists  - Asian Institute of Finance (AIF), set up by Malaysia's central bank to develop human capital for the region's financial industry. This means graduates are often inadequately equipped, and few in the industry are actively trying to solve the problem. It's a major issue - nobody wants to take ownership of training graduates in areas that are most needed by the industry.

The Islamic finance sector's need for specific skills in risk management as well as internal audit and governance, plus a basic grounding in sharia law, is not being communicated. One reason for the skills mismatch in Islamic finance is the youth of the industry; it was born in its modern form in the 1970s, and in many countries has only become a mainstream industry in the past decade.

The industry has moved into relatively complex areas, such as Islamic money market instruments and hybrid Islamic bonds with equity-liked characteristics, only in the last few years. The fragmentation of Islamic financial regulation, with sharia boards and national regulators in various countries taking different approaches to some core products and concepts, may also be an obstacle to effective training.

Employers could provide some of that specialised training, but banks in Malaysia have so far been reluctant to do so because of the time and cost involved. Instead they tend to poach skilled staff from rivals, a quicker and cheaper alternative.

Universities also need to revamp their curricula to suit industry needs, but it inevitably takes a long time to evaluate and implement changes. Malaysian authorities have responded by trying to intervene directly in the job market; the International Centre for Education in Islamic Finance (INCEIF) was set up by Malaysia's central bank in 2009 to help with training.

INCEIF's chief academic officer, said the centre's signature Chartered Islamic Finance Professional qualification, a one-year postgraduate programme, had only attracted a handful of industry executives to its staff.
Only five of the centre's full-time lecturers boast actual exposure to the sector and most have retired from active involvement in the corporate world, he said. The centre's 12-member professional development panel, which meets quarterly, has only two Islamic bank heads, from Bank Islam and OCBC Al-Amin.

About 60% of INCEIF's graduates find employment within six months, according to an internal survey, the centre said, declining to provide further details of the survey.

Syed added that job opportunities for Islamic finance graduates were limited partly because companies such as Maybank Islamic, the largest Islamic bank in Asia, did not need large workforces as they could leverage staff from their parent firms - in Maybank's case, Malayan Banking. AIF hopes a new advisory panel comprising representatives from across the industry can close the gap.
A new Financial Services Talent Council, being planned by the central bank, is to include individuals from the education ministry, Islamic banks and universities, in the hope of setting a national agenda for the industry's talent needs.

 Many foreign students expect easy access to Malaysia's job market when they obtain local Islamic finance qualifications, but some are turned down because banks face costly, time-consuming visa requirements to hire foreign students.

"They waste one year here, and many of them are upset with this," said Omar Alaeddin, an INCEIF graduate and current member of its student representative council. So many students return to their home countries with Malaysian Islamic finance qualifications.

This has the benefit of spreading knowledge globally, but the students can also have difficulty finding jobs back home.

"At the beginning they come here thinking there are hundreds of banks and employees," said Alaeddin, who teaches risk management and sharia auditing at Universiti Kuala Lumpur. "Then some go back and work in their previous jobs, which have nothing to do with Islamic finance."

Leadership - Thinking Outside The Box

Are leaders born or made? Has technology changed leadership style? Business thought leaders provided new insights while deliberating upon the age old issue at the World Innovation Summit for Education. Gauri Rane reports from Doha.

Leaders are born—is an often debated statement. Why is one able to take quick and effective decisions? And why is one despite having the position, falls short of expectations of the senior management?

Globalisation has definitely created several career opportunities. This has also led to the emergence of several added qualities that senior level executives need to keep in mind in order to make effective contribution to their companies. Jerry MacAurthur, senior presidential fellow at New York University says, “Leadership today is something like losing control. A leader needs to somehow magnetize people in his/ her direction to achieve a shared vision.”

This brings us to the question—has there been a shift in leadership skills? And how does a leader get people to follow and help them get empowered so they become great performers on their own?

“There has been a significant shift in the quality of leadership received and in the type of leadership needed to solve complex problems that the world is facing today,” says Eric Glustrom, founder, Educate, an organisation that delivers practical and relevant education to 16-20 year olds in Ugandan schools. Glustrom believes that it has become important to distinguish between complex and simple problems as different problems require different types of leaderships.

“Leadership now-a-days is more network-based, relational, less talk down, and more collaborative fundamentally,” he says, adding that a new mindset has been cultivated thanks to technology. Glustrom is currently working on developing a university model called the Watson University, to accelerate the ideas of student innovators, leaders and entrepreneurs.

Sandeep Aneja, Kaizen Pvt Equity, feels that just because technology has come in the principles of leadership have not changed. “In fact, leadership across time has had the same values and principles, but in the context,” says Aneja, adding that leadership of military army cannot be the same as compared to the leader of a company, versus a leader of a political party, a leader of a society, or a family. He cautions senior level professionals to distinguish between qualities of a manager versus that of a leader. “A manager can decide to be collaborative but a leadership has only one choice, to listen, learn and encourage failure,” he opines.

Ewa Iwaszuk of Earth Fellows and also a 2012 WISE Learner adds, “Being a leader in the 21st century is a courageous task as in our globally local world, we need leaders who can trust and depend on their teams.” According to Iwaszuk a good leader would be someone who facilitates the growth and learning of their teams so that they can best explore their abilities.

21st Century leader must…
Create a workplace where people work out of passion and not out of fear

Create a shared vision so that everyone contributes to achieve shared goals.

Explore capabilities and give freedom to experiment

Give people a sense of growth and achievement

Learn from subordinates

Be brave enough to give up control

Techies quit their hectic corporate life to get into full time teaching in private MBA institutes.

In what is turning out to be a trend, people are quitting their hectic corporate life to get into full time teaching. Thanks to lack of quality teachers and professors, private MBA schools are luring corporates professional to join them as full time professors and not just visiting faculty.

In fact, data available with various private MBA schools show that over 30-40% of their faculty are corporate professionals with 15-20 years of experience.

“I started teaching way back in 1992 when I was still very active in my corporate life. However, it was on and off as I did not have the time to get into full time teaching. I mainly did that to keep myself abreast with the latest development in the academic world,” says TN Swaminathan, professor of marketing and director branding, PR & alumni associations, Great Lakes Institute of Management.

Swaminathan got into full time teaching in 2004. “I was always interested in teaching. There comes a point in your life when monetary aspirations take a backseat. You want to pursue your dreams,” he says.

Unlike government colleges and institutions, private MBA schools do not take into account the research work undertaken by a person in order to qualify as full time faculty. A person need not even have a PhD.

“These schools are more practical in their approach. They are not bothered about your research papers as much as they see your industry experience. At the end of the day that is what matters as only bookish knowledge does not help students in their jobs. They need to be taught what the industry expects,” says Rajeev Paripurnam, dean of Global Institute for Corporate Education (GICE).

Like Swaminathan, Pariprnam also quit his corporate life to get into full time teaching. “Corporate life is nothing short of a rat race. You are fighting for one thing or the other. Since there are so many gaps between what the industry needs and the kind of grads our B-schools churn out, corporates with experience, who get into teaching, act as a bridge,” he says.

“Concepts come alive when you have industry experience. There are many who know only from a conceptual side, but have little practical knowledge. In such cases, it is better to have someone with industry experience,” says Jayanta Sengupta from United World School of Business.
Sengupta has 25 years of experience in the advertising industry.

“When I quit, I was sure I am quitting not only the company but the industry. Teaching gave me the opportunity to give something back to the society.”

However, there are some who feel that teaching is an art; hence one must have the expertise.
“I see many corporate professional who do not have the aptitude needed to be a good teacher, get into teaching. Not everyone is a good teacher. They think that by having the gift of garb, they can get away. Teaching is no child’s play,” says S Rajeshwar, chairperson of admission and professor of information systems, Loyola Institute of Business Administration (LIBA).

Universal Life Underlying Danger

Low interest rates are imperiling in-force universal life insurance policies, and consequently pose a potential threat to trusts and estates. Attorneys, accountants and financial advisers are struggling with universal life insurance policies that were written during periods of higher interest rates for use within an irrevocable life insurance trust to help soften the blow of estate taxes. These days, those policies – which were sold in the 1980s and '90s – are at risk of lapsing, and clients will have to make the choice between letting the policy go, taking a cut in death benefits or shelling out even more money to fund premiums and keep the policy in force.

 

“Back in the day when the estate planning attorneys drafted these trusts, many of them also became the trustees,” said Thomas J. Henske, a partner at Lenox Advisors. “They didn't think of the life insurance [inside] as an investment, but rather as something they could set and forget. These policies are now set to fail and the price for remediation is enormous.”

 The cost of failing to keep up with an insurance policy are very real. One of Mr. Henske's clients bought a policy from an agent when he was 40 and was told he would be paying premiums of $12,000 a year for $4 million of coverage. At the time, the interest paid on the policy was 6.25%.When Mr. Henske reviewed the policy six years later, the credited interest rate had come down to 4%, and now the client will need to pay up $25,000 per year to keep the policy.  “This is problematic: He budgeted for $12,000, and now he's literally paying double that amount to keep it in force,” said Mr. Henske. “If we hadn't audited the policy, it would've been even more. If you catch it early, you have a better chance of beating it.” This client wound up keeping the policy at the higher premium. The problem is that these policies were based on optimistic interest rate assumptions, back when those rates were as high as 15%. So-called UL features included not only a death benefit, but also a cash value account that receives interest and that can be funded by a portion of premium dollars. Costs of insurance are drawn from the cash value. Upbeat interest rate projections at the time meant that clients being sold these policies did not expect to pay much to fund the policy's costs. Those high credited interest rates supposedly would help foot the bill. “Even the most conservative agents and brokers were projecting 7% to 10% [long-term] interest rates,” noted Henry Montag, a partner at Financial Forums Inc., who has been discussing the issue with a number of estate planners.  But in today's low interest rate environment, it's become significantly harder for insurers to credit the rates clients were expecting 20 years ago. Now, those customers need to cough up more money to fund the cost of keeping the policy in force. If they can't, they have the option of lapsing or cutting their death benefits. Even charitable giving plans that intend to donate UL death benefits to causes have also been dinged by the development.  Mr. Montag estimates that many of the trustees overseeing the affected trusts also are relatives of the person who set up the vehicle in the first place. “They accepted the position without any knowledge of their responsibilities, duties and liabilities, nor do they have the skills necessary to successfully keep the trust's primary holding — its life insurance — from expiring prematurely,” he said. In fact, those trustees run the risk of violating the fiduciary duty they owe the trust if the insurance policy fails, according to an Oct. 17 newsletter from the Association for Advanced Life Underwriting. There's a lesson here for financial advisers and trustees: Treat life insurance as an asset that will require a periodic check-up to ensure that it's holding up in today's environment. Randy Whitelaw, managing director of Trust Asset Consultants and co-creator of The TOLI Center, a life insurance risk management services provider, uses a framework that not only employs an investment policy statement but also ponders the suitability of a given policy for a trust.  “If it's determined that it's suitable, you want to ensure that there is a credible evaluation to determine the premium amount necessary to be paid to sustain the policy,” he said. As for policies that are already in crisis, advisers should evaluate whether the client can reasonably reduce the policy's death benefit. “Many of these were bought when the estate tax exemption was far below what we have today [now at $5.25 million for individuals],” said Gavin Morrissey, senior vice president of wealth management at Commonwealth Financial Network.
Still, “there may be cases where they need the liquidity, say for state-level estate taxes or if it's part of a buy-sell agreement or for succession planning,” he added.

Dressing Up GST

Effective 1 April 2015, Malaysians like many of their counterparts in the developed world will have to pay the Goods and Services Tax (GST) when they purchase products or seek services.

However, most Malaysians are still at a loss on how the GST is going to affect their lives with many fearing they may have to pay more or by at least 6 percent of the GST rate that has been set by the government.

The confusion is further compounded by misleading information given by those antagonistic towards GST and the wrong information has spread through the grapevine.

HOW GST WORKS

GST, a broad based consumption tax, is meant to streamline taxation at every stage of the supply chain right from the manufacturer or service provider to the end-user.

Though admittedly it is not a popular move, it is implemented to enhance the efficiency of the taxation system and deter tax evasion. GST also allows a more transparent tax collection system and at 6 percent the government is expected to collect at least an additional RM30 billion in taxes annually.

GST is an innate feature of the developed nations including Malaysia's neighbour Singapore. Malaysia and Brunei are the last two nations that have yet to implement GST within ASEAN.

SINGAPORE'S EXPERIENCE

Malaysian Association of Tax Accountants (MATA) president Abd Aziz Abu Bakar was reported saying recently that when Singapore introduced GST at 3 percent, it was imposed on everything, even the essential items were not exempted.

Yet Malaysia is taking a cautious step in imposing GST so that consumers will not be burdened by higher costs. Therefore Malaysians won't be paying GST for certain essential goods like unprocessed meat, cooking oil, sugar and essential services like electricity, education, healthcare, toll, financial transactions and life insurance.

Singapore in fact took a different route to cushion the impact of GST through an offset package - reducing corporate tax rate by 3 percent to 27 percent while the personal income tax rate was cut by 3 percent to 30 percent.

The initial GST rate of 3 percent when introduced in 1994 was among the lowest in the world as the focus was not to generate substantial revenue but to allow people to get adjusted to the tax.

Later it was revised to 4 percent (1 Jan, 2003), 5 percent (1 Jan, 2004) and 7 percent (1 July, 2007).

Singapore's government argued that any exemptions would actually help the high-income group more than low income group, because well-off households usually spend much more on essentials (whether food or healthcare or other basic necessities) than lower-income households.

Therefore it is not surprising to see that many of those who abhor GST are actually from the high income households.

WHAT MALAYSIANS WILL BE PAYING

So how much more Malaysians will be paying, and will they be paying 6 percent more for goods and services?

In a recent article published on a local daily on Oct 21, Price-WaterhouseCoopers Malaysia's Executive Director Raja Kumaran and consultant Tim Simpson provided some insight into GST mechanism in layman's terms.

A closer look into the country's taxation regime will reveal that Malaysians at present already paying the sales and service tax (SST) that has been subtly incorporated in the cost of products and services.

Malaysians already familiar with the 6 percent service tax for selected services, for example at hotels and posh restaurants. There is another consumption tax, namely the sales tax, that Malaysians have been paying but may not be aware of it.

"For example a carbonated drink sold is subject to a sales tax of 10 percent, but the tax is not generally itemised to the end user by the manufacturer. If the drink costs RM11, the drink actually costs RM10 and the tax amount is RM1.

However, as far as the consumer is aware he/she is buying a drink for RM11, not RM10 plus the RM1 tax," they explained in the article.

GST PREVENTS DOUBLE TAXATION

They also pointed out the SST could lead to double taxation, that can prove to be a demerit to consumers.

"Going back to the carbonated drink example. When buying the carbonated drink at a hotel, not only does the consumer pays an additional RM1.08 in tax under the current system, the hotel's profit carries a 6 percent service tax on the sales tax already charged by the drink manufacturer," both of them explained further in their article.

However, they pointed out the problem of double taxation is addressed in GST as the tax paid by the hotelier is recoverable as input tax credit and does not form part of the cost to the hotel.

Therefore under the current system, the drink costs the consumer RM14.58. Under GST, the drink will cost the consumer RM13.25, that is 9 percent (or RM1.33) less.

So did the carbonated drink become 6 percent more expensive? Definitely not. Therefore, consumers should not forget that they still stand to benefit under GST.

Proposed Changes Life & Takaful

Bank Negara Malaysia is issuing a concept paper on the Life Insurance and Family Takaful Framework (the Framework) for public consultation. The concept paper aims to seek feedback from members of the public, industry players, intermediaries and related stakeholders on proposals to further develop the life insurance and family takaful industry in Malaysia as envisaged in the Financial Sector Blueprint.

Objective

The Framework encapsulates initiatives to support a higher level of insurance and takaful penetration in line with Malaysia’s transition to a high-income economy. Under the Framework, life insurers and family takaful operators will be given greater operational flexibility to spur innovation and higher productivity.  In addition, wider channels will be developed for the provision of life insurance and family takaful products to the public.  At the same time, consumers’ interest will be further promoted through the preservation of policyholders’ value, the intensification of consumer education efforts, higher quality of services provided by intermediaries and enhanced disclosure standards to promote greater consumer empowerment.

 

Key recommendations

The Framework provides for the partial liberalisation of the commission, management expenses and agency related expenses limits to allow competitive forces to work more effectively, while strengthening incentives for product innovation and high standards of service provided by insurance and takaful intermediaries. Consumers’ interests will continue to be preserved through important safeguards that will be implemented under the Framework, specifically:

1: The introduction of the Minimum Allocation Rate for investment-linked products that will ensure a specific proportion of premiums paid by policyholders/participants will be allocated to the policyholder’s/participant’s unit fund for investment purposes; and

2: Improved disclosures to facilitate comparisons by consumers between products and to help consumers better understand the financial implications of purchasing an insurance or takaful product.

The Framework will accelerate the development of a wider choice of delivery channels. This will be achieved through the rationalisation of incentive structures between channels, while providing options for consumers to purchase pure protection products (term cover, medical and health and critical illness) through cost efficient direct channels, including over-the-counter and online channels.

In addition, the minimum financial and qualification requirements for financial advisers will be reviewed to deepen the pool of financial advisers in the insurance and takaful industry.

Limits on financing facilities provided to agents by insurers and takaful operators will be removed to allow greater flexibility for insurance and takaful firms to support the professional development of agents, in particular new agents.  This will be accompanied by requirements for insurers and takaful operators to proactively uplift the professional conduct of intermediaries through an increased emphasis on product suitability, quality of advice and service, and productivity, in the design and implementation of intermediary remuneration schemes.

To facilitate consumers in making informed decisions, a customised online product aggregator will be introduced to assist comparison of pure protection products from various providers. The online insurance account will also be introduced to provide consumers with easy access to the status of their policies. These initiatives will continue to be reinforced by targeted financial education and awareness programs to better equip consumers with the required knowledge, skills and tools to make sound financial decisions.

Feedback from the Public and various stakeholders
Members of the public, industry players, intermediaries and related stakeholders are encouraged to provide written feedback on the concept paper. The concept paper can be downloaded from Bank Negara Malaysia’s website at www.bnm.gov.my.  The deadline for the submission of feedback and comments is by 9 December 2013.

                               

 

Innovating Life Insurance Industry

Bank Negara Malaysia (BNM) has launched a concept paper on the introduction of a framework that seeks to provide life insurers and family takaful operators greater operational flexibility to spur innovation and higher productivity, for public consultation.

Under the Life Insurance and Family Takaful Framework, wider channels will also be developed for the provision of life insurance and family takaful products to the public.

"The concept paper aims to seek feedback from members of the public, industry players, intermediaries and related stakeholders on proposals to further develop the life insurance and family takaful industry in Malaysia as envisaged in the Financial Sector Blueprint," BNM added.

BNM said the framework encapsulates initiatives to support a higher level of insurance and takaful penetration in line with Malaysia's transition to a high-income economy.

At the same time, consumers' interest will be further promoted through the preservation of policyholders' value, the intensification of consumer education efforts, higher quality of services provided by intermediaries and enhanced disclosure standards to promote greater consumer empowerment.

"The framework provides for the partial liberalisation of the commission, management expenses and agency related expenses limits to allow competitive forces to work more effectively, while strengthening incentives for product innovation and high standards of service provided by insurance and takaful intermediaries.

"Consumers' interests will continue to be preserved through important safeguards that will be implemented under the framework, specifically wit the introduction of the minimum allocation rate for investment-linked products that will ensure a specific proportion of premiums paid by policyholders and participants will be allocated to the their unit fund for investment purposes," said BNM.

This includes improved disclosures to facilitate comparisons by consumers between products and to help consumers better understand the financial implications of purchasing an insurance or takaful product.

On the development of a wider choice of delivery channels, BNM said this will be achieved through the rationalisation of incentive structures between channels, while providing options for consumers to purchase pure protection products (term cover, medical and health and critical illness) through cost efficient direct channels, including over-the-counter and online channels.

"In addition, the minimum financial and qualification requirements for financial advisers will be reviewed to deepen the pool of financial advisers in the insurance and takaful industry," it explained.
Limits on financing facilities provided to agents by insurers and takaful operators will be removed to allow greater flexibility for insurance and takaful firms to support the professional development of agents, in particular new agents.

This will be accompanied by requirements for insurers and takaful operators to proactively uplift the professional conduct of intermediaries through an increased emphasis on product suitability, quality of advice and service, and productivity, in the design and implementation of intermediary remuneration schemes.

To facilitate consumers in making informed decisions, a customised online product aggregator will be introduced to assist comparison of pure protection products from various providers.
The online insurance account will also be introduced to provide consumers with easy access to the status of their policies.

The concept paper can be downloaded from BNM's website at www.bnm.gov.my. The deadline for submission of feedback and comments is by Dec 9, 2013.