Saving For Retirement

Malaysia's voluntary private-retirement savings program has gotten off to a slow start since being launched last year, despite lures of tax breaks for contributions and a high overall savings rate in the country.

Employees in Malaysia are required by law to contribute to the separate Employees Provident Fund, or EPF, which holds assets valued at more than 536 billion ringgit ($169 billion). Returns on that government-run pension fund have been at least 4.5% annually over the past decade, while one-year fixed deposits in banks earn up to 3.2%.

Still, authorities worry that Malaysians aren't saving enough for retirement. And as the Employees Provident Fund gets bigger, the government is concerned it won't be able to generate high enough returns to fund people's retirements.

Last year, the government launched the private-retirement program in an effort to supplement the savings in the provident fund.

Despite tax deductions on contributions and potential higher returns than in the provident fund, only slightly more than 30,000 accounts have been created, according to the Securities Commission. That pales in comparison with more than 6.4 million active contributors to the Employees Provident Fund.

The steady returns on the EPF are making it more difficult for the group of nascent private-retirement funds to persuade both employers and employees to sign up.

Although Malaysia's average age is relatively young at 26 years old, and private savings in the country exceed a third of gross domestic product, authorities say there is an urgent need to raise the level of awareness on boosting retirement savings as life expectancy rises.

Steve Ong, chief executive of the Private Retirement Scheme Administrator, a Malaysian state body set up to oversee and promote the industry, says the average Malaysian has saved about 160,000 ringgit with the Employees Provident Fund for roughly 20 years of retirement, which is insufficient.

Employees are required to contribute at least 11% of their income to the EPF, and employers must contribute 13%.

To help kick-start the industry and entice workers like Ms. Lim, the government gives annual tax deductions of up to 3,000 ringgit for the first 10 years on the new funds, while employers will be given tax deductions on contributions made on behalf of employees.

Insurance For The Living - Not Dead

More middle class families are facing hard times in a tough economy, which has led to a greater share of their household income being needed for basic living expenses and less money being available for purchases they consider discretionary or nonessential.

 

Life insurance is often one of those expenses that gets placed on the back burner when other financial needs come to the forefront. The 2010 study found that ownership of individual life insurance policies had hit a 50-year low and that 30 percent of all U.S. households — 35 million people — have no life insurance protection at all.

In its 2013 Insurance Barometer Study, LIMRA found an estimated 11 million U.S. households with children under the age of 18 where the parents have no life insurance. “You never know what kind of curve balls life will throw at you. When people say they cannot afford life insurance, at the end of the day it’s a matter of what their priorities are.”

 After nine years of marriage, Officer Mayhle and his stay-at-home wife, Shandra, were living from one paycheck to the next. They had two daughters, ages 4 and 2. Their housing expenses had gone up. They needed a new car. And the couple had even begun discussing the idea of Shandra babysitting to bring in extra money.

When their financial frustration reached a breaking point around the summer of 2008, the Mayhles decided the $50,000 whole life insurance policy they bought when they got married in 2000 had to be dropped. They would use the policy’s cash value for a down payment on a 2007 Ford Explorer.

“We were looking at our budget and I believe at the time we were paying $35 a month for the policy and at the time it would have been nice to have the extra $35 a month,” she said. “So the plan was we needed the cash value that had built up.”

As fate would have it, instead of cashing in the policy for about $1,200, Mayhle’s insurance agent convinced him to change it to a $250,000 20-year term life policy for around the same monthly payment.

Nine months later, Ofcr. Mayhle was killed in the line of duty on April 4, 2009, one day after he turned 29 years old. The devastating turn of events left his family emotionally torn, but the insurance helped them get through the mourning process and replaced some of the income that was gone forever. Now his widow has become an advocate for life insurance, partly because of her new job in customer service for an insurance agency and partly because of her own experience.

There were many people in and out of her house within hours of the news of her husband’s death after responding to a domestic disturbance becoming public.One of her visitors was insurance agent Chad Gregorini, who came to inform her that her husband had a $250,000 life insurance policy through State Farm Insurance Co.

“That was huge,” she said. “In my head, I was able to think, ‘OK. I will pay off the house, the car. I will get a job, but at least the main things will be taken care of.’

Leadership - Respect, Trust & Loyalty

As the workplace evolves to become more trustworthy, transparent, ethical, collaborative and mindful of its employee needs – leaders must be equally diligent to earn respect from their colleagues. Being the leader doesn’t mean that you have earned respect. Too many leaders take their titles and authority for granted. Some leaders believe that they are owed and/or command some level of (unearned) respect just because of where they are positioned on the organizational chart.

Respect, trust and loyalty are earned over time. Ultimately, it has been the quality, consistency and presence of one’s character that I have always paid most attention to. In other words, does the leader talk a good game or do they have the ability to put their words into action that impacts others in a positive way?

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To help you achieve sustainable success as a leader who puts people first, here are five ways to earn respect from your employees:

Consistently Strong Work Ethic; Set The Standard
Actions are stronger than words, and this is personified by the respected leader. Great leaders despise false promises and people that create lots of unnecessary noise to get attention. There are many leaders that play the part on the outside, but have very little substance on the inside. Respected leaders are those who consistently prove through their work ethic that they are reliable and trustworthy on the inside and out.

These leaders set the tone and are great role models. The tangible and measureable results of their consistent work ethic influence new best practices and cultivate innovation. Ultimately, their leadership defines the performance culture for the organization. They set the standard and leave behind an indelible impact.

Not  Afraid to Take Risks; Admit Wrong Doing
Respected leaders are those who are not afraid to take risks. They are bold enough to change the conversation and seamlessly challenge the status quo for the betterment of the organization and their competitive advantage. They can anticipate when a paradigm shift is in order and are courageous enough to act on it.

The other side of this admirable quality is the ability to admit wrong doing. Respected leaders do not hesitate to make the most difficult decisions and will put themselves out on the frontline to lead by example. They gravitate towards what many view as a “leap of faith” and willingly accept the challenge – knowing very well that the odds may not be in their favor given the personalities and inherent obstacles that surround them.

Sponsor High-Potential Employees; Serve Others Rightly
Respected leaders think about making others better. They don’t leach, they lead. They are mindful of those that give a 100% effort to their responsibilities. Respected leaders find ways to discover the best in people and enable their full potential. When they detect high-potential talent they impart upon them their wisdom and provide a path for long-term success.

Leaders that “sponsor” their employees put their own reputation at risk for the betterment of the individuals they are serving. This is an admirable quality and one that is highly respected amongst a leader’s peers.

Powerful Executive Presence; Long-Lasting Impact
The most respected leaders are the most authentic people. Their executive presence is genuine and true. They make those around them feel that they matter and they welcome constructive dialogue regardless of hierarchy or rank. Respected leaders trust themselves enough to live their personal brand and serve as powerful role models to others. Their presence creates long-lasting impact that leaves a positive mark on the organization and the people they serve. Respected leaders are passionate, impact-driven people. Their presence is felt when they walk into the room; their reputation and their track-record precede them.

Have Their Employees’ Backs; Deflect Their Own Recognition
Too many leaders are recognition addicts and want all of the credit. They spend too much time breaking-down rather than building-up their teams. They don’t take the time to genuinely learn about other’s needs. Leadership is ultimately about knowing the people you serve and giving them the guidance, inspiration and navigational tools to make their lives better and enable more opportunities.
Leaders earn respect when they reward and recognize their employees and colleagues. They take the time to appreciate and understand the unique ways they each think, act and innovate – and are always on the lookout to enable their talent. They are trusted, admired and respected because they make it more about the advancement of others, rather than themselves. They share the harvest of the momentum they build with others.

Change Is Opportunity

Over the years, we have seen fame wane, or pure intelligence fail our leaders, as they were ill equipped to see their ideas put into practice.  Now, adaptability – the ability to not only embrace but to use change to enhance your and your organization’s trajectory – is the desired trait for the modern leader.  Great leaders love change, see it as an opportunity, and realize the potential for growth.

Love Change

The adage thrown around corporate board and lunchrooms is that “no one likes change.”  I disagree with that.  Great leaders LOVE change.  The masses may not like change; they may like to keep the status quo.  But real leaders love change.  They thrive on the possibilities that change brings.  They fully realize that many will see change as a negative disruption for their daily lives and it is a leader’s responsibility to help them through that disruption.  Our routines are like comfort food, and our great leaders know this – can truly empathize with it.  They also understand that major changes occur and cause us to re-evaluate our roles, our organizations, and ourselves.  A great leader will be mindful that change can be uncomfortable, and will help their peers and teams see what the future can hold for them.  More importantly, they will take the lead on how to get there and will help their folks get to that “new reality.”

Change Is Opportunity

Great organizations always had leaders who embraced change and look for the opportunity in the chaos.  While at eBay, there was a constant state of flux, and then CEO Meg Whitman rotated her leaders around the organization to build bench strength.  The CFO today might be the CMO tomorrow. But, when she stepped down, the organization was nonplussed and new leadership stepped in – just as she had designed it.  Change brings new responsibilities and new opportunities to leaders who are willing to embrace it, not shy from it.

Change Brings Change

We changed and adapted along the way – change in schooling, geography, organization, responsibility, personal, etc.  Every great leap forward in your career has been brought about by change.  There are obvious limits to the pace of change that is good for your career.  Constant, unending change is detrimental.  But, a change – even a jarring one – can force you to step out of your comfort zone and help you realize new skills within yourself.

Many people and organizations around you will deride change. Customers may see change as destabilizing.  However, our world is getting smaller and smaller, and we are more interdependent on market forces we sometimes cannot see.  Change comes at a now alarming rate.

As leaders it is our job to help the market view change through our eyes, help our customers see change to their benefit, and help our people see change as a way to enhance their growth and development.

Islamic Financial Services Act

Takaful operators like Syarikat Takaful Malaysia Bhd and Takaful Ikhlas Sdn Bhd, a unit of MNRB Holdings Bhd, are aggressively strategising their operations to ensure profitable growth and taking advantage of the five-year time frame given to composite takaful players to fully comply with the new Islamic Financial Services Act (IFSA).

Under the Financial Services Act (FSA) and IFSA, which came into force on July 1, composite insurers and takaful players would be, among others, required to split their life and general insurance businesses under separate licences.

Takaful Malaysia group managing director Datuk Mohamed Hassan Kamil told StarBiz that as takaful operators are given the five-year time frame by Bank Negara to fully meet the terms of the new Act, the company would be devising and evaluating an array of potential options to achieve more efficient solutions from the capital management and shareholder return perspectives.

“We would review and evaluate all this. Hence, it is unlikely for the changes to materialise in the current financial year. The takaful industry players have yet to digest the full breadth of the IFSA to decide what would work best for them, going forward, especially towards sustainable growth of the takaful markets. This would definitely take time, as financial institutions need to better understand the application of the IFSA,” he added.

On whether the Act would take a hit on Takaful Malaysia’s bottomline in view of the split in operations of its family (life) and general businesses, Hassan said although there would be potentially higher cost initially due to start-up costs, in the long run, it would benefit the company and consumers as a whole, as the company would be more focused in terms of strategic planning, management, cost control and enhanced customer service. The capital position too would be further strengthened, he noted.

RHB Research, in an earlier report, said that the new ruling to split the life and general insurance businesses could have a “huge impact” on insurance firms, especially takaful players like Syarikat
Takaful Malaysia and Takaful Ikhlas.

It added that the impact would be felt more deeply in the takaful industry due to the higher number of composite licences issued to them compared with their conventional insurance counterparts.
Meanwhile, Takaful Ikhlas president and chief executive officer Abdul Latiff Abu Bakar said while the split timeline given to comply was within five years, the company was looking more towards compliance with the other requirements first, of which the deadline for compliance was within a year.

“We are currently at the gap/impact analysis stage. As far as business is concerned, Takaful Ikhlas would continue to focus on enhancing its family agency business, of which new investment link products were just recently launched. It is too premature to comment on the capital and profitability.
“We have not done any simulation on both.”

Takaful - 20% Growth

After a slowdown in the first quarter, the life insurance sector is expected to pick up steam for the remaining year underpinned by strong demand for specific products, good economic growth and a relatively low penetration rate of insurance in the country.

Life Insurance Association of Malaysia (LIAM) president Vincent Kwo said despite the overall slowdown in new business, investment-linked policies bucked the trend with an overall positive growth of 4.1% in the first quarter this year.

Overall, he said traditional policies continued to be slightly more preferred by consumers than investment-linked business with a take up ratio of 50.6% to 49.4% in the first quarter compared with 52.9% to 47.1% for traditional and investment-linked policies respectively in the same quarter last year.

In retrospect, for 2012, the growth of the industry was underpinned by a solid performance in the investment-linked business, which grew by 20.9%. Investment-linked products are more flexible and provide better transparency and are increasingly becoming consumers’ preferred choice.

For 2013, LIAM anticipates new business to expand at a rate of about 10%, taking into consideration the projected economic growth rate of about 5%. Based on the data as at February 2013, new business’ total premium in 2012 was RM8.20bil compared wiith RM7.92bil in 2011.

Ernst & Young Malaysia partner (assurance) Brandon Bruce Sta Maria said life insurance had room for continued growth as the penetration rates for life insurance was lower compared to more matured markets such as Singapore and South Korea, adding that he expected the industry to maintain at least an equal growth rate compared to last year.

“New business growth in 2012 was about 2.2% but given the continued strong performance of investment-linked products and the roll-out of more annuity-type products to take advantage of the tax reliefs introduced during the last Budget, the industry should be able to maintain a steady growth for 2013,” he noted.

For the general insurance industry, Sta Maria said he expected premiums to continue to exceed prior year’s expectations due primarily to increased economic activity and growth.

This, he said, would be further enhanced by the expected increase in new motor premiums and the effects of the gradual increase in motor tariff premiums.

For takaful, he said Malaysian industry players remained confident that they would be able to continue to record more than 20% growth in 2013 in line with prior year’s achievements, although on a global scale, contribution growth was at a decelerated rate of about 18% for 2011.

Managing Criticism

Why criticism is so hard to take? A negative comment affect you badly but never affects a friend of yours? Negative comments won't affect you even if you are emotionally sensitive.

You mistakenly connected the negative comment to a wound: We humans are always biased towards our beliefs even when they are incorrect, as a result, whenever we get criticized we quickly try to connect the negative comment we got with one of our wounds. If three people were rejected in a job interview then the one who doesn't like his looks will believe he wasn't accepted because he is not good looking, the one who doesn't believe that he is smart will believe that he was rejected because of his low IQ while the one who thinks that he is boring will believe that he was rejected for that same reason. In fact all three could have been rejected for completely different reasons than the ones that came to their minds but because we humans are biased towards our beliefs we usually interpret rejection and criticism incorrectly

You never took the human nature into consideration: One of the site's readers contacted me and told me that she feels so bad because a friend told her that she is not pretty. After further investigation we found that her friend was jealous and she just wanted to put her down. In other words, people who say negative things about you aren't always right but they sometimes try to put you down out of jealousy or even hatred.

You gave a different meaning to the words you heard: If someone told you that you are incompetent because you didn't do a certain task well then this doesn't mean that you are incompetent in general but it might mean that he wanted to tell you that you could have done better. Criticism hurts because we give different meanings to the words we hear and the situations we go through. I know a friend who used to believe that a person who moves his eyebrow while talking to him is a one who dislikes him! When we examined that false belief together we discovered that he had been interpreting words and messages incorrectly throughout his life and that's why he always felt rejected.

See the real world

If you want to prevent criticism from hurting you then you must see the real world. If you have been looking at life through your wounds lens then its time to drop that lens and see reality.Learn how to understand the intentions of the people you deal with, know how to interpret their words correctly and criticism won't affect you the same way it used to affect you.

Taking The Hits In Business

There are so many reasons that could lead to failure in the business world but most of these reasons can be summarized under too major categories, lack of knowledge about the obstacles you are going to face and giving up too early.

Have thick skin: As soon as you start a business some friends will start telling you that you are wasting your time, others will tell you that your idea isn't worth believing in while a third group will tell you that you will never make it. People will always try to put you down and convince you to back off whenever they find you trying to do something that they never dared to do. If you want to become successful in business then you must learn how to take these hits and keep moving forward. The one who never falls isn't the one who never gets hit but he is the one who keeps moving forward while bearing all the hits.

Fight your own doubts: After lots of people put you down you might start believing in their words and you might even give up on your business. The only way to avoid falling in this trap is to be aware of it before you even start the business. Before you tell your idea to anyone write down the reasons you believe in it in a piece of paper and keep that paper in your pocket so that you read it whenever anyone tries to shake your beliefs.

Take the hits: No one ever succeeds in business in 2 weeks or one month and success path is never a straight line. You will face failures, some of the things you had in mind wont go as expected, you will find certain unexpected obstacles and you will face devastating setbacks. The only difference between those who succeed in business and those who never do is that the first group keeps moving forward no matter what happens.

Choose the people you talk to: If a person is not one of your potential customers and if you believed that he might not like to see you succeeding then don't tell him about your new venture. Talking a lot about your business might result in attracting haters and jealous people who can put you down. Because beliefs can wear out as a result of criticism and sarcasm you might lose hope in your business after talking to few haters or pessimistic people. Protect your beliefs by talking only to the right people.

Work Hard Or Work Smart

IS it better to have employees who work smart or hard?

In the early days of my career, the generally accepted practice was to stay in the office later than your boss. Although there are still companies who practise this, many organisations are taking the work-life-balance approach. It used to be a status-symbol to be extremely busy because it meant that you were doing something really important.

However, things have changed. Taking too long to replay an email these days is usually frowned upon and could even lead to loss of a business opportunity. Hence, being busy is not necessarily fashionable anymore. In fact, being able to waltz into the office well after 10am and being able to leave before 6pm is now seen as an enviable position to be in.

Colin Powell, the former US secretary of state coined this phrase, “A dream doesn’t become reality through magic; it takes sweat, determination and hard work.”
There certainly is a strong argument for hard work as almost any successful person that comes to mind has had to put in the “sweat-equity” to get where they are today.

Warren Buffett the well-known American business magnate spends a great deal of time studying investments and financial data before making business decisions.

The famous NBA player Kobe Bryant is said to prepare for game days with marathon workouts and would show up for practice at 5am and only leave at 7pm during his high school days. For these individuals, there is no question about it – hard work is necessary for any measure of success.

On the other hand, Bill Gates’ hiring policy is to “choose a lazy person to do a difficult job, because he will find an easy way to do it”. Hence, he prefers individuals who work smart. In fact such, individuals who strongly advocate working smart may even believe that working smart trumps working hard because it has the allure of using intelligence to make work less arduous – at least on the surface level.

How do you know if you are working hard and not smart?
The most obvious tell-tale sign of working hard and not smart is if you are the first person to arrive in the office and the last to leave, yet you are still not getting your work done on time. There may be instances when we stay back late to meet some deadlines or put in extra hours for a project during the peak periods. However, if this is a perpetual occurrence, it becomes a pattern.

Another example is if you are putting in more hours than the rest of your peers but not being recognised for your efforts. It may be that your projects just require more time and effort to deliver but if you are doing more than your fair share of work for no good reason, it may be a symptom of working hard but not smart.

7 Ways to Work Smarter
Working smarter doesn’t necessarily mean that you need to change everything you do but it could start with a few small changes such as these seven suggestions.

Work Smarter Idea No. 1 – Begin with the end in mind
It is always wise to know the end-game or the final destination of your journey. For example, if you are executing a project, it is essential to understand what the deliverables are and the deadline for the work to be completed. It is also important to understand why you are doing this so that you are able to see the bigger picture, remember why you need to stay focused and complete the job.

Work Smarter Idea No. 2 – Have a plan in hand
We cannot deny the importance of planning when it comes to execution. Failure often stems from a lack of preparation and planning. It is also crucial to have a structure in place that supports your plan and helps get you to the final destination that you have defined earlier. Let’s face it, there will be times that our energy may be low and we may even get side-tracked from our goals. A solid support structure will help us stay on track. For example, setting time for status report meetings by putting the dates in everyone’s calendar in advance will allow for regular timely updates and adjustments to be made if and when necessary.

Work Smarter Idea No. 3 – Outsource
There is a strong argument for playing to our strengths as all of us excel in something but we can’t be a “Jack-of-all trades” and neither should we attempt to be, as this may derail us from being successful at what we are good at.

As such, it may make more sense to outsource a non-core task or bring in external consultants to work on areas which require expertise that your team does not possess. Otherwise you and the team may be pulled into the trap of spending a lot of time trying to reinvent the wheel and end up with a wheel that doesn’t work as well as it should.

Work Smarter Idea No. 4 – Go for the High-Impact Items
The higher up the corporate ladder you are, the more meetings and training opportunities you are likely to have. Whilst it would be nice to attend them all, it may be physically impossible to do so.
For instance, it may be wise to choose which training sessions to attend by selecting the ones that can add the most value to your personal and professional development.

Work Smarter Idea No. 5 – Stop being a perfectionist
Many of us try to do everything ourselves because it may appear that guiding someone to do the job will take too much time and effort. However, this task may take-up a lot of valuable time which could have been spent on more productive work particularly if it is a recurring task. The idea is to delegate the work that can be accomplished by someone else so that you can focus on what really matters.

Work Smarter Idea No. 6 – Pick Your Battles
It would be nice if we could all go through life without any obstacles or roadblocks. Unfortunately, this doesn’t happen in reality. There is usually that one individual whom you know will object to your idea in a meeting or a boss who won’t easily approve your plans without numerous detailed discussions. In such situations, it is important to pick your battles and not try to fight every single one of them as the time and energy spent may not justify your efforts.

Work Smarter Idea No. 7 - Be open and get help from others
We often forget that we are not alone in most situations that we face. Someone you know may have faced a similar situation or you may have a colleague whom you can brainstorm with to come up with solutions. The burden may not seem as heavy if you are able to share it with someone, even if it is just to get another perspective; of course it is also important to choose your confidant wisely and not disclose confidential information that should not be shared.

Needless to say, if we are only working smart and not putting in the necessary hours we may not achieve our objectives and goals as it generally takes about 10,000 hours of practice to master a skill or to become an expert. Working smarter in such an instance may not be enough; rather, achieving a balance of working hard and working smart is the ideal combination.

Incredible - Poor Helping The Poor

“There were times when we survived for days on only water.” That statement came not from an adventurer describing the ordeal of being marooned somewhere far from civilisation, but from a housewife explaining her life of poverty in Kota Damansara, just a five-minute drive from downtown Kuala Lumpur.

Devi Arumugam, 41, lives with her husband and three children in a PPR (Public Housing Project) flat in Section 8, Kota Damansara. A visit to her place would leave no doubt as to the extent of her destitution.

But instead of receiving aid from the government or some charitable organisation, she depends on help from her neighbours, many of whom are not much better off than her. It seems to be common practice among the poor at PPR Kota Damansara to help one another out whenever they can.

Devi’s husband, A Ganesan, was doing odd jobs until about two months ago. A series of asthma attacks and knee problems have left him unemployable. But even when he was working, Ganesan never could take home more than RM200 a month.

“We keep a 5-kilo bag of rice,” Devi said. “We use the rice sparingly so that it would last. We know we have to depend on it during those times when we have absolutely nothing to eat. “Most of the time, we eat chapatti or bread. It’s cheaper that way.”

She said some of her neighbours would sometimes give her family groceries or food they had cooked.

“But my neighbours are also poor,” she said. “How can I expect much from them?”

Devi said that she could not afford to pay her children’s school fees. She also said the children would often skip school because of the high transportation cost.

She added that she often suffered water and power cuts because she could not pay the bills.

Living a few floors below Devi is another destitute woman. Hamisah Osman, who is 64 and diabetic, has lost her right leg. Now the remaining leg is also infected due to poor nutrition and an unhealthy environment.

Hamisah said her poverty had forced her to languish in her agony instead of seeking medical attention. “I can’t even afford to pay for the transportation cost,” she said. “I only go for routine check-ups but even that depends whether I have the money or not.” she said.

Hamisah’s husband left her several years ago. She now lives with 15-year-old son.

R Malathi, who lives in the same block as Devi and Hamisah, said residents at the PPR decided some time ago to help out one another instead of relying on the promises of politicians.

“Political parties from both sides as well as NGOs have visited us many times, but all they give are empty promises,” said Malathi, who often gives grocery items to Devi and Hamisah.

She criticised the PPR management for being insensitive to the plight of poor residents in its insistence on timely payments of rent.

“When we are unable to pay our rentals, the water supply will be stopped, even if the water bill had been settled,” she said.

“The management does not even give leeway during Deepavali and Christmas, when water will get disrupted due to late payments.”

Perumahan dan Hartanah Selangor Sdn Bhd took over the management of PPR Kota Damansara last April 22.

Who Is Malala Yousafzai

Last Friday, Malala Yousafzai took to the podium at the U.N. It was her 16th birthday and her first major public appearance since the Taliban’s attempt to assassinate the Pakistani schoolgirl last October for her efforts to promote girls’ education.

Traces of the near-fatal attack were still visible, as the disfiguring on the left side of her face showed. But as she demonstrated in a powerful and moving speech, her resolve had not dimmed.

Malala issued a simple plea: she wanted the world’s leaders to offer children free and compulsory education. She said that she wanted to wage a war against illiteracy and terrorism, but had no use for the tools of violence.

“Let us pick up our books and our pens,” Malala urged. “They are our most powerful weapons. One child, one teacher, one book and one pen can change the world.”

The audience, both inside the U.N. hall where she spoke and among the many who saw the speech live on television around the world, responded with tearful applause. 

Who Is Zhang Xin ??

When China's female property tycoon Zhang Xin's teenage son wanted to have more money, she suggested finding work at a fast food restaurant to him. Despite being having a net worth of US$3.6 billion (S$4.6 billion) according to Forbes, Zhang does not let her high profile nature and wealth of her business to influence the way she brings up her teenage sons.

Born to Burmese Chinese immigrants in Beijing in 1965, Zhang Xin and her mother had to move to Hong Kong when she was 14 to look for jobs in factories. Five years later, Zhang managed to save up enough money to move to England and pursue a university education.

After a stint at Wall Street in New York, the former Goldman Sachs employee decided to tap into opportunities in China and returned to Beijing. There, she met her husband Pan Shiyi and they set up SOHO China in 1995.

With Zhang's business acumen and her husband's ambitious drive, SOHO China rose to become one of China's most prominent property development companies and is worth more than US$3 billion (S$3.8 billion) today, said CNN. Her husband currently sits as the chairman while she holds the position of CEO in the company.

To be successful, Zhang says women must be fearless to rise to the top. She says they have to go for their dreams even if it means resisting social norms. When walking into a room full of older and powerful men, the CEO of SOHO China remains unfazed. Explaining to CNN, she said she doesn't think of anything else except closing the deal and getting the job done.

According to her, a lot of women despite being smart and educated, at some point will decide to stay at home as it is more comfortable. That attitude she said, is the real barrier stopping women from succeeding in their careers.

7 Myths Life Insurance

You should never let insurance myths keep you from achieving your financial goals. Planning for contingencies like death and hospitalisation forms an important part of financial planning. By purchasing a life insurance cover, one can ensure support to the dependents of his/her family in the event of his/her death.
There are a number of myths associated with life insurance that should be debunked first:

Life insurance is a waste of money -  Life insurance is meant to provide protection from the contingency of death. It takes care of a family's living expenses should the holder die young.  Life insurance is more of a safety mechanism; it is to provide financial security to the dependents. Term policies that cover the risk of untimely death are cheap and also most ideal for providing life coverage.

Life insurance is for saving taxes alone -  This could probably be a selling point for agents but tax-saving is one of the many benefits life insurance offers. The main benefit is the provision of finances in case of the death of the policy holder. Taxes can be saved with other tax-saving instruments also, like mutual fund, ELSS, NSC, and public provident fund (PPF).  Planning for the financial needs of one's family in the event of his/her death is a must. Ideally, the cover should be for about 7 to 10 times the annual income of the bread-earner.

The young don't need life insurance -  The common notion that people die when they are old may be true to a large extent, but having the risk of death covered is definitely better than leaving dependents financially bereft. In fact, a smarter move here is to take the benefit of lower premium rates offered to the young. Also, you may find it difficult to take life insurance when you are old due to higher premium rates or being refused because of ill-health.

Life, medical covers are provided by employers -  Such covers are available only until you continue to work with the employer. Also, life insurance provided by employers may not adequately cover the living expenses of your family in the case of sudden, unexpected death.  It is advisable to buy medical insurance when one is young, as fresh medical insurance taken just prior to retirement could be refused on medical grounds. Critical illness policies help meet additional living expenses of the family members in case of a critical illness.

Attractive units for a limited period -  This is more of a sales gimmick in most cases. Most insurance products are designed in such a manner that all the major costs are incurred in the first few years and deducted from the premium. There are charges that the company wishes to recover over the entire tenure of the policy. So very less is actually invested in units.  It is, therefore, best to look at unit-linked insurance plans with an open mind and consider a commitment of periodic investment for the whole tenure of the insurance policy. Paying for a longer tenure could result in a more profitable proposition.

Best to buy policy in a minor's name -  This emotional sentiment selling point has helped many in selling policies. Also, the premium paid on child policies may be much less than on a policy for an adult wanting the same coverage.  Do we really need life cover for a minor? A life insurance policy is taken to make the loss of income to the family good. Therefore, a smarter thing to do is to take a policy with a child as beneficiary or nominee and life cover to the bread earner.

Pleasing relatives/associates is important - Avoid taking policies just for the sake of satisfying your friends and relatives who are insurance agents. Also, avoid taking policies just to maintain your relationship with business associates such as bankers.

Insurance policies need to be taken based on your need. These days, online term insurance plans are approximately 50 per cent cheaper when compared with term policies taken through agents or brokers.

Having understood these myths, one can make insurance a very valuable and useful proposition

Life Insurance Salesman

In March 1969 I was a 22-year-old DJ in clubs in Stockholm. My grandpa had been sending me weekly letters saying, “Come home to London and be an accountant”; the next week, “Come home, be a solicitor”.

This was the swinging '60s. I had hair down to my shoulders, I lived in an unheated flat in Grevgatan, where I slept in the long Afghan fur coat that I wore all day long, and I had just shown The Doors around the delights of the city. Suffice to say the idea of becoming an accountant didn’t fill me with excitement.

 I received yet another letter. This time he’d written, “Come home and be a life insurance salesman.” Clearly he was getting desperate.

I knew my time in Sweden was coming to an end so I set myself up with an interview with a new company called Abbey Life, based in Oxford Circus at the time.

After an intensive interview and training session lasting five minutes, the manager, a small man in three-inch Cuban heels and a black Beatle wig, thrust a rate book, a dozen application forms and a 10-page sales script into my hands. “Learn this presentation word for word and come back at 9am tomorrow with your first sale.”

“But who do I sell to?” I asked.

He took me to the window and we looked down at the crowds below. He pointed at them. “Them! You sell to them! You will never run out of people,” he said.

I borrowed 50p for a taxi home and hailed one outside the door. “Where to guv?” the young driver asked.

“Just keep driving,” I said.

I began to read from the script: “Recently I’ve been showing a new savings plan to many successful businessmen like yourself,” I began.

After driving round and round Mayfair for 20 minutes, I somehow had got to the last page and said,

“If you’d just okay it where the cross is”.

“Thank you very much,” said the taxi driver as he signed up for a £20 a month policy. “How much do I owe you for the taxi?” I asked. “Have it on me,” he said.

I didn’t know the average salesman only sold five policies a month and I soon broke all sales records selling 30 or more policies every month to everyone from Lords to dustmen. If they moved I signed them up! Tube train guards, waiters, scaffolders, lawyers, doctors, bankers, everyone I met. Every night I was in the Speakeasy or Revolution clubs selling life insurance to rock stars.

Unfortunately, I became a compulsive gambler at Charlie Chester’s casino in Archer Street and forgot to go to work for a year. I finally hit rock bottom on March 21, 1971 and went to GA (Gamblers Anonymous) to put my life back together one day at a time.

In 1982 I started having breakfast sales meetings every day at Claridge’s. It got me out of bed every day and I soon discovered people find it very difficult to say no to you when they’ve got ‘your’ food in their mouth! It’s the greatest hotel in the world (when I die I don’t want to go to heaven, I want to go to Claridge’s).

If you are a tractor salesman you spend your life talking to farmers and if you are a drug salesman you talk to pharmacists but if you are a life insurance salesman you can talk to anybody, anywhere! And so I’ve spent my life talking to everyone from presidents to parking wardens, from film stars to fruiterers.

I am still a life insurance salesman. Retire? Never! I love what I do and have so much fun so why would I ever want to stop doing something I love doing? It’s been the most incredible roller coaster ride. I love life! I love selling! I love selling life!

I’ve booked my table at Claridge’s to December 12, 2046. I will be 100 and one days old. I might think about slowing down a little then. When I die I want to die running at full tilt, totally burnt out and empty.

Talking to Strangers: The Adventures of a Life Insurance Salesman by Peter Rosengard

Shadow Banking

A "shadow banking" crisis is looming if left unchecked and could potentially derail the Malaysian financial markets and economy. The reason for such concern is plain to see from the staggering numbers those institutions are now showing. Last year alone, non-banking financial institutions (NBFIs) gave out 43 billion ringgit (US$13.4 billion) in new personal financing facilities, up from 63.7 per cent previously according to Bank Negara's Financial Stability and Systems Report 2012.

This is more than two times the loans disbursed by banks for personal loans at 19.4 billion ringgit for 2012. The central bank notes that such loans extended by the three largest NBFIs grew at a faster rate of 23.1 per cent in 2012 versus 17.1 per cent a year ago. That growth is faster than the 10.4 per cent recorded by the entire banking sector.

The culprit for such high credit growth is personal financing. According to the central bank, NBFIs supplied 60 per cent of personal loans to the country last year and growth in that segment by the shadow banks grew by 29 per cent. Personal loans by the commercial banks clocked in at 9.1 per cent.

Such lending has pushed household debt to GDP at a frightening 83 per cent of GDP. That ratio is the highest in emerging Asia and was at 70 per cent in 2009. Developed western countries have a higher ratio but are now mired in economic problems.

A shadow bank is essentially a term used to describe institutions that take on bank-type functions. They are lenders that are not governed by Bank Negara before this but compete with the banks in lending money to the public. But not anymore as the new FSA has allowed the central bank to get the shadow banking industry to comply with its rules on lending.

In Malaysia, it isn't clear just how large the shadow banking system is as they are not captured in any formal banking statistics. But some estimates put it at easily several hundred billions the amount of money loaned out. Among the more prominent shadow banks are lenders such as the Government-owned Bank Rakyat Malaysia Bhd (Bank Rakyat) and public-listed Malaysia Building Society Bhd (MBSB). Cooperatives are also another player in the shadow banking sector.

Now, the shadow banks, including the cooperatives, will have to comply with new lending rules, which limit the amount of the debt of vulnerable borrowers to a maximum of 60 per cent of their net income.

The Angkasa syndrome
The phenomenal rise of shadow banks over the last few years can be attributed to mainly one party or rather, a system of credit - Angkasa or Angkatan Koperasi Kebangsaan Malaysia Bhd. This is the national umbrella body for cooperatives whose members make up of civil servants by virture of them being the bulk of cooperative members. It was formed in 1971 by Royal Professor Ungku Abdul Aziz, who is co-incidentally the father of Zeti.

While the original motives of creating Angkasa were noble, what has since transpired though is that Angkasa has become a major conduit for 'wild' lending to civil servants, and this is where the problem is. The Angkasa scheme allows for deductions of as much as 60 per cent of a borrower's total income, net of statutory and other direct deductions from salary.

Bank Negara notes that 80 per cent of the personal financing by NBFIs are given out to government servants with a monthly household income of less than 3,000 ringgit. This means that about 34.4 billion ringgit in personal finance loans were dished out to that group of lowly paid civil servants last year if Bank Negara's 43 billion ringgit NBFIs figure is used as a guide.

Angkasa's 2012 annual report showed that 10.3 billion ringgit was made via the automatic salary deduction scheme with the bulk of it going to the civil service. As a comparison the government was projected to have paid out 52 billion ringgit as salaries to civil servants last year.

But what are the sources of these funds? Do note that Angkasa is merely a conduit to these loans.
Industry sources say there are a multitude of sources from which these funds come from.
Judging from the low risk element in these loans, as Angkasa enables salary deductions to repay the loans, there had been a race by funders to lend to government employees. Even the mainstream banks have tried to get a slice of this pie.

Analysts note that the earnings of MBSB and Bank Rakyat have risen sharply in recent years primarily due to an increase in personal financing activity. As a result of vast sums of personal loans being dished out to mainly civil servants, a number of NBFIs have become really profitable, even more than some of the banks in the country.

Bank Rakyat's profit before tax and zakat of 2.11 billion ringgit in 2012 for example is comparable to RHB Bank Bhd which made 2.2 billion ringgit. MBSB and Bank Rakyat declined to comment.
It is estimated that over 90 per cent of civil servants are in an "indebt situation" in various ways like credit cards, personal finance and high-purchase debt.

"The easy loan access in recent years has thrown civil servants deeper into debt. Wouldn't this encourage corruption?" quips an industry observer.

Credit card debt accounted for 5.2 per cent of household debt before the central bank decided to act a couple of years ago. Today, such debt accounts for 4.5 per cent of household debt and credit card debt grew by 1.7 per cent last year from 15.2 per cent in 2010.

A crack in any one of them (non-bank lenders and credit cooperatives) will likely trigger a contagion effect resulting from panic withdrawal by customers who have placed funds in savings or fixed deposits. Should there be a contagion effect, we fear that it may knock on the doors of the banks given the high household debt to GDP of 83 per cent."

Who You Know Vs What You Know

The market for "who you know" can be a very lucrative one if you have chosen to ignore the direction of your moral compass. So let's not kid ourselves. Life and business has always been about who you know and, in an increasingly connected and networked world, it's time to embrace that fact rather than ignore it.

Here are just some of the ways which demonstrate that who you know can make all the difference between business success and failure, especially for businesses and startups that want to grow quickly.

People Power - These days, the first port of call for most new hires should be your own network or colleague’s networks. A recommendation from somebody you respect can be invaluable.
This is especially true for small or medium-sized businesses that cannot afford to shell out for an expensive recruitment consultant.

Sales Power - One of the biggest problems that startups or smaller businesses often face is trying to get a foot in the door with larger clients or compete with businesses with a longer track record. You are seen as a riskier bet by seasoned buyers. So, good industry knowledge and contacts (even if they are friends of friends or part of your wider network) can unlock that all-important meeting or deal. And the only way you can really ensure new sales people can hit the ground running is that they come with a tried and tested bank of contacts.

Howdy Partner - Networking is not just key for outright sales, but also wider business development opportunities and partnerships. Often smaller businesses are starved of distribution opportunities and don’t have the financial firepower to just spend, spend, spend on marketing.
The right partnerships that open up new avenues can put entrepreneurs on the right road to success, sharing the upside without the downside of significant extra costs.

Bright Ideas - Who you know helps any business keep on top of product development. Whether its keeping in touch with the brightest and the best in your sector, or fuelling the creative spark with other people you know, collective knowledge breeds innovation.
In a fast-moving world, contacts can also help give you the fast track on the latest IT and other developments, which can improve the productivity of your business and save you money.

Money Tal - Most businesses need financial support at some point. If you are stuck high and dry in the bank lending desert, funding from family, friends and supporters could make all the difference.
When it comes to early equity funding and start-ups, family and friends are often the difference between being a "wantrepreneur" and an entrepreneur.

Social Club - These days, marketing is so much quicker, easier and cost-effective if you can go social and promote your product or brand through Facebook, Twitter et al.
When it comes to social networking, who you know is crucial. If you are well connected to well connected people, then you can do very well online. Similarly, having the right contacts in the press or knowing influential bloggers can save a lot of money on public relations (and journalists and writers always prefer to deal directly with passionate entrepreneurs with great stories to tell).

Sounds Right - "Who you know" doesn’t just need to be about money or new business.
Strong advice, mentoring and support can help any business steer the right course. Crucial experience can help any business avoid those costly mistakes that are all too common amongst smaller businesses run by first time entrepreneurs.

Now don’t get me wrong. I admire and respect any Open Door policies that can help young people from all backgrounds to reach that elusive first rung of the career ladder.

But let's not fool ourselves. Who you know is always going to be important for any business or any opportunity and that is not going to change in a hurry.
So get networking – your future might depend on it.

Tips On Effective Presentation

1.    Profile your audience – Focus on their interests and concerns. This presentation is not about you, it’s about what your audience wants to get out of this session. This is the single, most important factor in presenting and the one that so many people get so wrong! Spend five minutes thinking about who they are and ask yourself what their needs and anxieties are in the context of the subject matter you wish to present.

2.    Establish your main message – This may sounds obvious but 95 per cent of presentations have no clear objective and the message isn’t apparent until close to the end because many presenters either hold it back purposefully or are not clear of it themselves. Audiences need to know what your talk is about right from the start.
3.    Grab attention –  Give your audience a good reason to listen to you and show them how they will benefit from what you have to say. Make big, bold and interesting statements at the start. You don’t have to back them up at this stage – that comes later.

4.    Keep topic areas to three or less – For example, if you are pitching to clients those topic areas might be, budget, quality and the delivery. Using these topic areas, you can bring in all the things you want the audience to hear in order to persuade and motivate them about your ideas or message.

5.    Illustrate points – Illustrate your points with examples, stories and/or case studies that are going to make the points you are trying to get across memorable.

6.    Sum up decisively – The conclusion is no time to let the thing peter out or, worse still, rush in a desperate attempt to get the presentation over and done with. Reiterate your main message, sum up and end decisively on a positive note.

7.    Use positive language throughout – The language you use needs to be positive and encouraging. Use a conversational tone in your approach and try not to use unfamiliar terms, jargon words or phrases that baffle or alienate members of your audience. If you must, then always define them.

8.    Deliver with impact and enthusiasm – Create energy by using your hands, as you would do in everyday conversation. Emit warmth and confidence by smiling and standing still and straight.

9.    How to use PowerPoint – Only use it if it is going to enhance your presentation, don’t make it the focus of your audience’s attention. Keep text to less that 15 words per screen, or better still just use pictures because these don’t stop the audience listening to you.

10.     Practice, practice, practice – This cannot be stressed enough. Make sure you dedicate plenty of time to rehearse your presentation. It may sound like an obvious thing to say but so many presenters fail to deliver through not putting the time into making the subject matter come alive and instilling confidence in their audience.

9 Traits of Leadership

Heart leaders, head leaders, and gut leaders. If you stalled on trying to place yourself in that schema, there’s a reason: Everyone is guided by their heart, head and gut. At the same time, everyone has a tendency to predominantly rely on one of those aspects of their being in their leadership.

In turn, each of those three forms of leadership breaks down into three possibilities. Heart leaders tend to be helpers, entertainers, or artists. Head leaders tend to be activists, disciples or thinkers. Gut leaders tend to be drivers, arbitrators, or perfectionists. In the end, one of those nine traits is your predominant behaviour, but the other eight are still part of your composition. As you mature, you evolve between traits.

Here’s the breakdown of the nine traits:

Helpers: These leaders are able to understand people and empathize with them, making helpers admired for their ability to sustain positive and mature feelings in others. They prefer close relationships, support and actively listen to others, work slowly and effectively with others, and handle conflict well. But at some point, as with all the traits, it can go off kilter, and when derailed, helpers – while seeing themselves as loving and generous – can be selfish and manipulative.

Entertainers: Believing they will be admired and respected only if they deliver results, entertainers become fixated on success and it becomes central to their self-conception. They thrive in organizations where style trumps substance and symbols beat out reality. Derailed entertainers become jealous and hostile toward anyone who challenges their success.

Artists: These may be the most creative and innovative leaders, as a result of their deep understanding of themselves. They are liked because of their ability to communicate their personal feelings and to help others get in touch with their own feelings. But it can go wrong if they become so self-involved they lose touch with the needs of others, making unreasonable demands on teammates.

Thinkers: These leaders like to analyze the world around them and are capable of turning their brilliant thoughts into actions. They are also valued for their ability to solve problems. But thinkers can have trouble translating impulse into action, not acting until they are certain of what they want to do. They can also become so engrossed in their thoughts, they lose touch with others.

Disciples: These leaders can be loyal, committed and dependable. They don’t usually set the tone, but help others to get things done. Derailed disciples are so dependent on authority that it leads to feelings of inferiority and they become unable to act on their own.

Activists: These leaders are sensation seekers who are excited by their surroundings and very busy, the day never long enough for what they want to accomplish. They see themselves as happy and cheerful, but underneath that bright exterior can lurk a deep well of pain that they brush aside by burying themselves in activity.

Drivers: These confident leaders inspire confidence in others and that allows them to accomplish a lot. They are take-charge people, perhaps the most aggressive leaders, enjoying imposing their will on their environment, which can include other people. They like the attention they get when they make their presence felt – that boosts their energy. Derailed drivers are fixated on getting to the top and can over-exploit others.

Arbitrators: These leaders sympathize and empathize with others, making them feel assured. Rather than creating conflict, they identify common ground and bring people together. But they can start to idealize other people, creating an image others can’t live up to, and when derailed hold on to these illusions and divorce themselves from reality.

Perfectionists: These leaders want to get everything perfect, for themselves and others. They are highly critical of themselves and others – favourite words are “should” and “must.” But as frustrations mount over imperfections it can turn into a rage at the imperfect state of the world. This can fuel even more energy to change things, but the anger can consume them.

You may see yourself or others in those leadership profiles. The book offers details on each, including how to mature in your own leadership by shifting your emphasis. It also supplies tips for dealing with others who have these traits. But it’s a slog to read, given so many personalities and details on each, and is certainly not something you should try to read in large snatches if you hope to assimilate the information.

Occupational Accidents

The government, through the human resources ministry, targets to reduce workplace-related accidents to three in 1,000 workers by 2015, as compared to 3.31 in every 1,000 workers last year. The number of occupational accidents, whether commuting accidents or accidents at the workplace, as reported by Socso last year, stood at 61,552 cases as compared to 59,897 cases in 2011.

Of this figure, commuting accidents increased from 41.42 per cent in 2011 to 42.66 per cent last year, while accidents at the workplace showed a drop.

Financial Services Act 2013

The Financial Services Act 2013 (FSA) and Islamic Financial Services Act 2013 (IFSA) finally came into force effective yesterday, more than seven months after Parliament approved the Acts in December 2012. “The FSA and IFSA amalgamate several separate laws to govern the financial sector under a single legislative framework for the conventional and Islamic financial sectors respectively, namely, the Banking and Financial Institutions Act 1989, Islamic Banking Act 1983, Insurance Act 1996, Takaful Act 1984, Payment Systems Act 2003 and Exchange Control Act 1953 which are repealed on the same date,” said Bank Negara Malaysia (BNM) in a statement issued yesterday.

“The new laws will place Malaysia’s financial sector, encompassing the banking system, the insurance/takaful sector, the financial markets and payment systems and other financial intermediaries, on a platform for advancing as a sound, responsible and progressive financial system,” said BNM.

According to the statement, one of the key features of the new legislation is greater clarity and transparency in the implementation and administration of the law due to clearly defined regulatory objectives and accountability of BNM in pursuing its principle objective of safeguarding financial stability, transparent triggers for the exercise of BNM’s powers and functions under the law, and transparent assessment criteria for authorising institutions to carry on regulated financial business and for shareholder suitability.

The IFSA gives a clear focus on Syariah compliance and governance in the Islamic financial sector where it provides a comprehensive legal framework that is fully consistent with Syariah in all aspects of regulation and supervision, from licensing to the windingup of an institution.

A key feature mentioned is “strengthened business conduct and consumer protection requirements to promote consumer confidence in the use of financial services and products.” Paul P Subramaniam who is the Knowledge Management & Training Partner at Zaid Ibrahim & Co in a report published in April that FSA also specifies prohibited business conduct (Schedule 7 of the FSA) where contravention may result in imprisonment not exceeding five years and/or a fine of no more than RM10mil or both.

The report said institutions are expressly prohibited from exerting undue influence and pressure on consumers to make debt repayments and to accept unsolicited offers for financial products and services.

Subramaniam said the FSA also prohibited exerting undue pressure, influence or using or threatening to use harassment, coercion, or physical force in relation to the provision of or payment for financial services or products; and exerting undue pressure on, or coercing financial consumers to acquire financial services or products as a condition for acquiring another financial service or product.

Early this year The Malaysian Reserve broke a story on how insurance/takaful companies keep disregarding BNM guidelines on “Immediate Measure to Ensure Wider Access to Motor Cover and Prohibition on Force-Selling” issued on May 2011 which prohibits insurance companies and takaful operators to force the sale of personal accident and/or other non-motor products to their customers.

In a response then, BNM emphasised that it engaged with these insurers/ takaful operators to ensure full compliance with the guidelines. - See more at:

Takaful - Challenges

The takaful insurance industry faces a number of major challenges as it grows both in the region and across the Islamic world and further afield, said a top official of the Central Bank of Bahrain (CBB).

"Corporate governance within the industry is a major challenge," CBB executive director of financial institutions' supervision Abdul Rahman Al Baker was quoted as saying by the Gulf Daily News, our sister publication.

He was speaking at the opening session of the Deloitte executive roundtable on the global takaful insurance market, at the Ritz-Carlton Bahrain, Hotel and Spa yesterday.

"In contrast to policy-holders in a conventional mutual insurance company who are owners of the company, participants in general meetings and have the right to remove the management, takaful policy-holders have no such governance structures or rights although they are exposed to similar risks.

"They must rely on market competition to get a fair deal and good value for money in their dealings with the takaful operator," he added.

He said that standardisation of takaful accounting standards and disclosure, especially those related to capital adequacy and solvency disclosures, was a challenge as was the lack of human talents that have the necessary exposure and experience in the takaful business.

"One of the most critical challenges facing the takaful industry is the issue related to limited availability of Islamic instruments like sukuk, which are the most suitable type of investment for takaful companies," he said.

"Another challenge is with respect to offering micro-takaful to address the needs of lower income individuals in society as well as finding the appropriate distribution channels to offer takaful assurance services through banks," he added.

"The future prospects of the takaful industry will hugely depend on the combined efforts of all the relevant parties including regulators, market players and the community at large to chart the strategic direction for the industry. Collective effort is critical in order to maximise the potential for the takaful industry," he said.

"The global takaful industry has continued to demonstrate a strong growth momentum and is increasingly being recognised as one of the major components of the Islamic financial system," he added.

"As with other forms of Islamic finance, the industry has gained significant interest as a viable and efficient alternative model of insurance. Global takaful contributions amounted to around $13.7 billion in 2010, a significant growth of 23 per cent compared with 2009," he said.

"Overall, the GCC market contributed $5.7 billion which is more than 41 per cent of global takaful contributions,"

Winners Takaful Ikhlas

Awareness among Muslim Malays of the need for insurance cover needs to be raised to raise Takaful Ikhlas’ penetration rate, say two of the company’s top achievers. “Looking at the penetration rate of 12 per cent for 2012, we see high potential in the untapped market of about 88 per cent in our target market of Malay Muslims in Malaysia,” Nik Faizal Nik Fauzi, 36, whose Al-Faisal Agency collected RM1.5 million premium for the 2012/2013 period, told reporters.

Kelantanese Nik Faizal, who has an architecture degree from Universti Malaya, is the winner of this year’s Takaful mega agency award.

Zuraidah Hanim Ibrahim, who won the Million Dollar Round Table (MDRT) USA award in the personal achievement category, added: “Malays comprise 90 per cent of my clientele, and the level of awareness amongst Malays on the need to protect themselves with insurance is very low in comparison to the other races.” Zuraidah formed her Subang Jaya-based company Darul Asiah Consultant Sdn Bhd in 2003 with her husband.

Debts & Lifestyle

Civil servants are finding themselves spiralling deeper into debt as more among them fall prey to the lure of taking hefty personal loans to foot the bill for weddings, home furnishing, or even indulgences like expensive smartphones and cars.

Many even have zero savings to cushion their fall in times of financial emergencies but still apply for loans with great ease, banking on their job security and the easy availability of personal financing offered by non-bank financial institutions (NBFIs). The NBFIs include, among others, Bank Rakyat Sdn Bhd and Malaysia Building Society Bhd (MBSB), and development financial institutions (DFIs) such as Agrobank, SME Bank and Lembaga Tabung Haji.

Encik Ahmad is among those who have fallen into such a trap. Despite having a monthly salary of just RM1,700, 32-year-old Public Works Department general worker pays RM1,480 every month to service his personal and car loans without worrying much about defaulting on his debt.

Like many in the civil service, he is confident of his guaranteed job security and banks generally share the same sentiment as they comfortably issue large personal loans to government employees. If you work in the government, it’s easier to get a loan. Repaying loan instalment must not exceed 60 per cent of your salary every month.

Ahmad supplements his income with RM2,000 a month on average from shooting weddings part-time. He supports a stay-at-home wife and two young sons aged five years and seven months respectively in a single-storey house in Jitra, Kedah, that was provided for by his father-in-law.

He admitted that he finds it hard to save and only has “just enough to eat”, but had decided to buy a thousand-ringgit smartphone to keep up with the latest trend. “Smartphones are a necessity, everyone has a smartphone. Even makciks (aunts) are using smartphones.”

He added that a Honda Civic was preferable to a cheaper local car because foreign cars have “better quality”, saying: “If you want to buy a car, you want it to last long.” Ahmad stressed that he took out a personal loan to buy “necessities, not luxuries”, pointing out that a RM90,000 loan was “not much” as he knows others who have borrowed RM100,000 or RM200,000.

In recent months, economists stressed the need for stricter supervision on NBFIs that issue personal loans primarily to civil servants, voicing concern about the vulnerability of low-income households to economic shocks.

 

Bank Negara Malaysia (BNM) reported in March that 80 per cent of personal loans from NBFIs, which are not supervised by the central bank, goes to government employees with household incomes of less than RM3,000 a month.