Kambing Hitam & Collateral Damage

Prasarana Malaysia Bhd chief executive officer Masnizam Hisham in her parting shot has expressed her appreciation to the Finance Ministry for the issuance of bonds to pay the salary of its 17,000 employees. Masnizam, who has served Prasarana since 2005, will be stepping down from her position on Sept 2, 2018. 

“I am grateful and would like to thank the Finance Ministry for approving the issuance of sukuk/bonds that will allow the salaries of Prasarana staff for September and the coming months. At least, I did not leave the group with no salary provisions,” she said in her farewell message on Warna Prasarana Facebook page.

In the letter, she said she had taken over Prasarana at a time when costs were spiralling in several projects undertaken by the company, including the LRT3 project linking Petaling Jaya and Klang.

“If we had been firm in managing costs, we would not be in a financially situation like today. When I started holding the position on January 18 this year, I faced a financial position or cash flow that was only enough for only three months while the cost for LRT3 has surged beyond the budget set,” Masnizam said. 

She added that various efforts have been carried and up to July this year, the group saved a total cost of RM175mil that would enable to the group to reduce its losses by RM200mil this year. 

“What needs to be done now is to increase the number of passengers because we have a huge capacity and to grow  our “non-fare” income or income other than ticket sales,” she said. 

Finance Minister Lim Guan Eng, on July 10, said poor management by Prasarana had caused the total cost of the project – including land acquisitions, fees and interest – to increase to a massive RM31.45bil.

The Cabinet had since directed Prasarana to cut this by almost half to RM16.62bil by reducing the number of train-sets, shelving five stations and extending the timeline to complete the project from 2020 to 2024.

Spotting Bully In Office

Do you know anyone in your workplace who has the following traits? If so, they just might be a bully. When negotiating with someone who’s overly aggressive or an outright bully, definitely take note of the following characteristics:

Bullies tend to be egocentric. They have to be the center of attention in order to satisfy their need to appear superior to others. As such, they will belittle, demean, and put others down to maintain the appearance of their superiority.

Be watchful of who a bully associates with. Bullies tend to bring those who are weaker and like himself into his fold; he uses the former as foils in the plots he perpetrates against others. The caveat being, the bully needs to be the leader and will only allow in his immediate sphere those who will subjugate themselves to him. As such, you should be mindful of the fact that when you’re negotiating with him, you’re also negotiating with his minions.

A bully alters facts to make them fit his view of situations. Doing so is a way to psychologically arrest the logical thought process of others in an attempt to bend their outlook to his will and perspective. When negotiating with him, be selective as to the points in which you choose to engage him.

Loyalty between a bully and his associates is good as long as there are no threats in his camp. Once threats occur, loyalty loses its two-way appeal (the appeal is revealed as the smoke and mirrors that the bully employs from his bag of tricks). He will throw supporters under the bus! Loyalty becomes one-way, and that way is in favor of the bully. Loyalty to his supporters becomes muted because of the bully’s need to maintain a hold on his power and its sources at all costs.

A bully seeks constant praise from others because that feeds his ego and his need for self-aggrandizement. It serves as validation that he’s superior to others. Therefore, seek ways to praise a bully. That will endear you to him. Just make sure not to fall into his attempts to pull you closer to his views than is necessary.

Bullies lie incessantly because their view has to be the predominant one. Thus, they attempt to alter the outlook of others to make them conform to his perspective. This action of the bully is very dangerous because one never really knows what to believe when a bully speaks.

The only way a bully can rise to his perch is to do so by keeping others subjugated to his will. Once he loses any appeal that makes others bow to him, he can become more aggressive in his attempts to reacquire the power he’s lost. That’s when he’s most dangerous, because he may engage in activities that are very far outside the realm of rationality.

Malaysia Insurance Updates 2018

The General Insurance Association of Malaysia (PIAM) aims to increase life and non-life insurance penetration in Malaysia to four per cent by 2020. Chairman Antony Lee said the association echoed Bank Negara Malaysia's target, as life and non-life insurance penetration in the country was now below two per cent, which was half of where it should be. 

“For the urban middle to high-income classes, the figures are all right, while the rural and B40 (bottom 40 percent income group) segment remains an issue. We do need to work together to come up with a policy or a way of distributing as affordability is an issue and a lot also depends on government initiatives and support,” he told reporters during a briefing here today on the industry's first-half performance.

Lee said the association would like to engage more actively with the government and had requested for more interaction, as insurance is a strong pillar for the nation's economy.

On the general insurance industry's performance, he said it registered a marginal growth of 0.7 per cent in gross written premiums to RM9.23 billion in the first six months of 2018 compared with the same period last year.

Motor remained the largest class of insurance with a market share of 45.6 per cent, followed by fire at 19.2 per cent and marine, aviation and transit (MAT) at 8.2 per cent.  Except for fire and MAT, all classes of insurance grew during the period under review.
Motor insurance recorded a gross written premium of RM4.2 billion with a slower growth of 0.2 per cent for the first half of 2018 compared with 2.1 per cent growth in the same period last year.  

This was due to weaker consumer confidence amid the uncertain economic and political environment prior to the 14th General Election.

Medical and health insurance grew by 7.6 per cent to RM0.68 billion while personal accident insurance rose 1.7 per cent to RM0.62 billion.  On the Sales and Services Tax (SST) introduction with effect from Sept 1, Lee said it would adversely affect the industry.  

“The SST does not encourage the public to take up insurance, as (the cost) will spill over to consumers, and the transition pricing from the Goods and Services Tax (GST) to SST is quite messy.

“Government has made its decision. We have to abide by it and try to minimise the disruptions and hiccups, especially in its implementation,” said Lee.

Insurance and takaful services, including general insurance for individuals, are among the items listed as taxable with a six per cent service tax under SST.  Lee said PIAM would present its position and appeal to the Ministry of Finance on the SST introduction.

On the 2018 outlook, PIAM anticipates full-year growth to remain subdued, as the general insurance industry merely recorded a 0.1 per cent growth in 2017.

“It would be a slightly unusual second half, coming out from the GST holiday, and we expect there would be a slowdown starting Sept 1.

“However, a single-digit growth of one to two per cent is achievable,” Lee said.

Meanwhile, the motor premium would see some growth based on very strong car sales in the second quarter.

He said the premiums would spill over to third quarter, as car sales benefited the insurance industry.

RM14.8 Million Claim Per Day

A staggering RM2.71 billion was paid out in motor insurance claims in the first six months of this year which translates to RM14.8 million per day, said Mark Lim, the chief executive officer of General Insurance Association of Malaysia (PIAM).

He said at a media briefing today that the number of motor insurance claims in the country were alarming and this is attributable to reckless driving by Malaysians.

“Based on the statistics published by the Ministry of Transport, a total of 533,875 accidents were recorded in 2017, which is an increase of 2.4 per cent from 521,246 accidents in 2016,” said Lim.

PIAM chairman Anthony Lee said Malaysia has one of the highest accident and fatality rates in the region.

He said PIAM was working closely with the government to reduce road accidents by 20 per cent in the short term and 50 per cent in the long term by changing bad driving habits.

On a positive note, Lim said motor theft claims declined by 31 per cent from 8,590 units to 5,913 units in the first half of this year.

He attributed the decline to the efforts of the Police, Customs and other law enforcement agencies in combating vehicle theft.

On another note, Lim said the general insurance industry has also launched 40 new motor and 29 fire products in the market.

Lim also said the implementation of the Sales and Service Tax posed an administrative nightmare to its members as policies purchased during the tax holiday period between June 1 and September 1 had to be prorated on the portion of SST levied.

Many insurers were having a tough time sorting out that tax problem, he said.

SST On General Insurance

General insurance products will be subject to a service tax following the recent passing of the Service Tax Bill in Parliament, the General Insurance Association of Malaysia (Piam) said.

The tax will be applicable to individuals who purchase general insurance policies except medical policies.

“Consumers who purchase or renew their general insurance policies on or after Sept 1, 2018 will be charged a service tax of 6% on their premium.

“Policies bought prior that span the tax holiday period, that is from June to August and continuing after September will need to have Service Tax imposed on a pro-rated basis,” it said in a statement.

Piam clarified that individuals who purchased their insurance policies before June would be exempted from the tax because they had already paid the 6% goods and services tax (GST) which had been accounted for and paid to the Customs Department.

“For example, for those who purchased their car insurance on July 25, 2018 and the period of insurance is from Aug 1, 2018 to July 31, 2019, there will be two scenarios on tax applicable to his or her policy.

“Coverage for the month of August will have a zero-rated GST and a pro-rated service tax will be charged for the remaining 11 months, that is from September 2018 to July 2019.”

Piam also noted that one-time travel insurance policies purchased for travel overseas are not taxable.

However, annual travel policies will be taxable as the destinations are not specified under the policy.

Chairman Antony Lee said the service tax, that would take effect from Sept 1, was a contrast to the former service tax regime.

Insurance and takaful services including general insurance for individuals are among the items listed as taxable under the service tax.

“In this regard, Piam will present its position and appeal to the Finance Ministry on this change and the impact that it will have on consumers. The previous service tax regime did not apply to insurance policies purchased by individuals.

“Some of the insurance products purchased by individuals like motor insurance to renew road-tax and fire insurance for properties bought under loans are mandatory,” Lee added.