Brewing a startup - part 1

In a 10-part series, the Malaysian Global Innovation and Creativity Centre (MaGIC), in collaboration with The Star’s Metrobiz section, explores what it takes to make a great startup ecosystem, beginning with an understanding of what startups are all about.

The Father of Modern Chemistry, Antoine-Laurent de Lavoisier once said that it is vital “to submit our reasoning to the test of experiment, and never to search for truth but by the natural road of experiment and observation.”

A startup’s journey is not very different, in that it is meant to run a series of experiments before it hits a growth path. According to Steve Blank, a Silicon Valley serial-entrepreneur who developed the Customer Development Methodology, “A startup is an organisation formed to search for a repeatable and scalable business model.”

But what is a business model?

A business model describes how your company creates, delivers and captures value. An entrepreneur is supposed to create a vision for a product that solves a real problem in the world, with a series of assumptions about all the pieces. Who are the customers? How do you sell to them? How do you price and position the product? How do you build and finance the company?

An entrepreneur’s job is to quickly validate whether the model is correct by seeing if customers behave as predicted. Most of the time they don’t. So entrepreneurs are supposed to tweak that business model until they find enough traction to grow into a sustainable company.

Once on a growth trajectory, a startup decides to enter new markets or create new product lines and eventually exits favourably, providing significant returns to investors or venture capitalists.

Like science experiments, a startup is meant to fail several times before it succeeds. It is important that we understand this in order to support local entrepreneurs who are looking to push the boundaries of innovation.

Jack Ma’s e-commerce company Alibaba Group Holding Ltd’s recent US$25bil (RM80.7bil) initial public offering on the New York Stock Exchange, which is the largest in history, proves that Asian entrepreneurs and markets are just as competitive and innovative as those in the US.World largest IPO: Alibaba shows ...

Another revered Silicon Valley figure, Y Combinator startup incubator founder Paul Graham describes a startup as, “a company designed to grow fast.” He goes on to explain that a startup does not have to be newly founded to work on sophisticated technology or to take venture funding. He emphasised that the only essential thing for a startup to achieve is high growth.

Without high growth, a company is categorised as the more common small- and medium-sized enterprises of mom-and-pop shops, professional services firms, manufacturers, brick-and-mortar businesses, or resellers. They typically grow at a steadier rate, require physical locations, more up-front capital (usually bank loans as opposed to private investments) and are not as scalable (can only serve a limited number of people based on human resource capacity).

The new startups of the 21st century are also admittedly different from the old-school startups of the 1970s, back in the early Microsoft, Oracle and Apple days. Today’s startups are a new breed that leverages the Internet and technology to scale across borders very quickly.

Startups such as Facebook, Airbnb, Dropbox, Pinterest, Uber and Spotify have all achieved billion-dollar valuations in a matter of three to four years.

This signifies that we are in a new era where entrepreneurs are able to very quickly create global products that permeate our daily lives. And these entrepreneurs can come from anywhere, not just Silicon Valley, which is typically the benchmark for startup and innovation ecosystems around the world.

Startups are the main job creators in the US economy, and similarly, it will become the primary growth engine for Malaysia as we seek to become a high-income nation by 2020.

As a nation that is trying to push its own innovation boundaries, we should come together and support our young entrepreneurs and enable them to solve some of the toughest problems in our country and beyond.

Next week: Some of our local startups who have made it big.

By: LIM WING HOOI

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Malaysian homes more unaffordable than Singapore, Japan and the US; Budget 2015 brings little joy

File picture shows houses under construction in Kuala Lumpur. Malaysia has a ‘severely unaffordable’ residential homes market, according to researcher Demographia.— AFP

KUALA LUMPUR, Oct 13 — Malaysia has a “severely unaffordable” residential homes market, with housing even more out of reach for its residents than in Singapore, Japan and the United States, according to US-based urban development researcher Demographia.

Demographia’s report was cited today in a report in Singapore’s Straits Times newspaper to highlight how many Malaysians continue to be locked out of the residential housing market despite the federal government’s attempt at helping first-time house buyers.

According to the ST report, Demographia rates housing as severely unaffordable if it is 5.1 times median annual income. Malaysia clocks in at 5.5x, higher than Singapore’s 5.1x, while housing in the United States and Japan is “moderately unaffordable”.

Government data cited by the ST report shows that since 2012 median monthly household income has risen eight per cent annually to RM4,258, slower than the average housing price increase of 10 per cent to RM280,886.

The country’s consumer price index has risen by an average of 3.3 per cent this year and Putrajaya had warned it may spike by 5 per cent next year, tripling the 2013 average.

In presenting Budget 2015 last Friday, Prime Minister Datuk Seri Najib Razak introduced a Youth Housing Scheme that will waive down-payments and subsidise ownership by up to RM10,000 for 20,000 married couples under 40.

Najib also said the government would provide another 80,000 new homes priced at RM100,000 to RM400,000 under the 1Malaysia People’s Housing Programme (PR1MA).

Both schemes, including the existing My First Home (MFH) scheme are only for households with a combined monthly income of less than RM10,000.

According to Bank Negara only a third of My First Home applicants received loans in the first year, as banks refused to take risks.

And PR1MA has seen just 761 buyers for the 160,000 units launched since 2013.

“We earn just over that but it’s not enough for savings. We can convert rent into loan repayments but we can’t pay the 10 per cent deposit,” lawyer Puteri Mohamad told the Straits Times in commenting on the Budget proposal to help households earning less than RM10,000 monthly to buy homes.

Office administrator Mimie Azriene Mohd Zin, 32, has no children but she and her technician husband have applied for a PR1MA home.

But she told the Straits Times they have not figured out how to afford the down payment on their combined income of under RM4,000 a month that leaves them with little savings living in expensive Kuala Lumpur.

“We might not even be able to afford the repayment but we have to try before prices go up further,” she told the daily.

Source:  http://www.themalaymailonline.com/

Malaysia's budget aid brings little joy to house hunters

Despite being a partner in a law firm just outside Kuala Lumpur, Ms. Puteri Mohamad, and her fiance, can only watch as apartments in the area where she lives spiral above 500,000 ringgit (US$153,334).

When the government proposed measures in its 2015 Budget — released on Friday — to help households earning less than 10,000 ringgit (US$3,067) monthly to buy homes, she was not at all elated.

“We earn just over that but it's not enough for savings. We can convert rent into loan repayments but we can't pay the 10 percent deposit,” said Puteri, 33, who lives in a rented flat in Petaling Jaya.

Many Malaysians like her find themselves locked out by a combination of what U.S.-based urban development researcher Demographia rates as a “severely unaffordable” residential market and accelerating inflation.

Malaysia's consumer price index — which includes many subsidized goods — has risen by an average of 3.3 percent so far this year and the government warns it may spike by 5 percent next year, nearly triple the 2013 average.

Government data shows that since 2012 median monthly household income has risen 8 percent annually to 4,258 ringgit, slower than the average housing price increase of 10 percent to 280,886 ringgit.

Demographia rates housing as severely unaffordable if it is 5.1 times median annual income.

Malaysia clocks in at 5.5x, higher than Singapore's 5.1x, while housing in the United States and Japan is “moderately unaffordable.”

Prime minister Najib Razak said in his budget speech the government would provide another 80,000 affordable homes (priced at 100,000 ringgit to 400,000 ringgit) under the 1Malaysia People's Housing Programme (PR1MA) and introduce the Youth Housing Scheme that will waive downpayments and subsidize ownership by up to 10,000 ringgit for 20,000 married couples under the age of 40.

Both schemes, as well as the existing downpayment waiver under the My First Home scheme, are only for households with a combined monthly income of less than 10,000 ringgit.

The National Housebuyers Association lauded the moves to help aspiring homeowners in financing but criticized the lack of new measures to cool rising prices that are the root of the problem.

Its secretary-general, Chang Kim Loong, said speculators have taken advantage of the low entry cost of buying a property at the expense of genuine buyers.

Office administrator Mimie Azriene Mohd Zin, 32, has no children but she and her technician husband have been unable to even think of home ownership until these schemes came along.

They applied for a PR1MA home, which the government says is priced 20 percent lower than comparable units, worth about 200,000 ringgit three months ago.

But they have not figured out how to afford the downpayment on their combined income of under 4,000 ringgit a month that leaves them with little savings living in expensive Kuala Lumpur.

“We might not even be able to afford the repayment but we have to try before prices go up further,” she said.

That is, if she can get a loan in the first place. The central bank reported that only a third of My First Home applicants in the first year received loans as banks refused to take the risk.

Tellingly, even PR1MA saw just 761 buyers for the 160,000 units launched since 2013.

BY By Shannon Teoh, The Straits Times/Asia News Network

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Ma'sian immigration blacklists: PTPTN loan defaulters among 1.14 mil barred from travels

PUTRAJAYA: A wide net has been cast on those barred from leaving the country by the Immigration Department.

And it is not just tax offenders and those with criminal records who face a rude shock at border checkpoints or at the airport.

The latest figures show some 85,000 National Higher Education Fund (PTPTN) beneficiaries who did not repay their loans on the department’s travel blacklist.

They are among 1.14 million people on the list which includes 701,266 Malaysians.

The department has advised Malaysians to check their Immigration status prior to making holiday plans overseas to avoid problems.

“It is the responsibility of the traveller to first check if they are cleared to leave the country.

“It doesn’t matter if you are planning to leave by flight, road, rail or sea.

“As long as you are on the blacklist, you will not be allowed to pass the Immigration checkpoint, even if you have a valid flight ticket,” Immigration security and passport division director Ibrahim Abdullah told The Star.

As of Sept 3, the department’s overseas travel restriction orders included those who have been declared with outstanding debt issues. There were 277,693 such Malaysians named by the Insolvency Department.

Malaysians who have violated a foreign country’s immigration laws, such as by overstaying or abusing their travel visas, are also not spared.

Ibrahim said the countries concerned may bar the defaulters from re-entering the country and this information would be shared with the local Immigration department, such as Malaysia’s, which would then put the defaulter on a watchlist.

A total of 32,516 Malaysians were in this category for having overstayed in another country, alongside 115,803 foreigners who have similarly overstayed in Malaysia and are now barred from leaving the country.

“If any Malaysians on the watchlist try to leave the country, they will be stopped and taken in for an interrogation until it is satisfied that they will not commit the same act in another country again,” said Ibrahim.

Stubborn tax defaulters make up a sizeable group on the travel blacklist, with 135,111 persons named by the Inland Revenue Board.

The Star has reported on Aug 26 that defaulters will not be allowed to travel abroad until they have settled their tax obligations.

The treatment will be the same for those with outstanding issues with the Employees Provident Fund (EPF), such as those who failed to file their EPF contributions. There were 10,219 Malaysians and 532 foreigners listed under this category.

Another 133,314 non-citizens have been barred from leaving the country for having their citizenship revoked or application rejected by the National Registration Depart­ment.

This is on top of 88,830 foreigners who had entered the country illegally and have been classified under the Immigration’s Kes Tanpa Izin.

An unusual cluster of 210 Malaysians were also placed under this category which, according to Ibrahim, had referred to those who have been identified by the Home Ministry as having been involved in activities involving illegal foreign workers.

Several other categories were criminally-linked, including those under police observation (15,699 cases) and for drug-related charges (7,673 cases) or crime (5,090 cases).

There were also 4,953 Malaysians barred from overseas travel for violating Customs regulations.

To find out if you are barred from travelling abroad, one needs only to enter the MyKad number on the department’s travel status check portal at http://sspi2.imi.gov.my/

“If they have been barred, they must be present in person at the nearest Immigration passport and security division, where they will be told why they are not allowed to leave.

“This is to avoid identity abuse by a third party as we do not want private information to be divulged to an impostor,” Ibrahim said.

Almost 85,000 PTPTN study loan defaulters barred from leaving Malaysia

PETALING JAYA: Almost 85,000 National Higher Education Fund Corporation (PTPTN) recipients have been barred from leaving the country to date.

PTPTN chief executive officer Agos Cholan said the corporation had to resort to barring the defaulters from leaving because they had been ignoring repeated reminders to repay their loans.

He said the corporation would send borrowers a reminder to begin repaying their loans six months after graduation.

“If there is no payment after two months, the first notice would be sent,” he said.

This, he added, is followed subsequently by a second and third notice if there was still no repayment.

Agos said after this, the corporation would send a legal notice and subsequently blacklist the borrowers.

To lift the travel ban, Agos said they would need to make some payment immediately, depending on their income.

“They would also need to sign papers committing to pay monthly instalments and arrange for a bank’s standing instruction or salary deductions. Restructuring is allowed if they wish to vary instalment amount,” he said.

Agos said the number had reduced from some 130,000 in 2007 who were barred.

Since Prime Minister Datuk Seri Najib Tun Razak’s announcement that borrowers could expect a 20% discount if they repay their loans in full by March 31 next year, Agos said there had been a few enquiries on the dates.

Najib, when tabling Budget 2015 last Friday, said borrowers who were unable to do so could still get a 10% off their loans if they made continuous payments for 12 months until Dec 31, 2015.

Borrowers were given similar discounts under the Budget 2013.

The travel ban is also imposed on 277,693 Malaysians listed under the Insolvency Department for failing to settle their debts.

Tax defaulters are also on the blacklist, with 135,111 persons named by the Inland Revenue Board.

Another 32,516 Malaysians who have violated laws in foreign countries, including overstaying, have also been barred from leaving the country.

Also blacklisted are 115,803 foreigners who have overstayed in Malaysia.

Immigration's security and passport division director Ibrahim Abdullah told The Star that as long as a person was on the blacklist, they would not be allowed to pass the Immigration checkpoint, even if they have a valid flight ticket.

"It doesn't matter if you are planning to leave by flight, rail, road or sea," he told The Star.

The report added that the travel ban will also be imposed on those with outstanding Employees Provident Fund issues, including those who had failed to file their EPF contributions. A total of 10,219 Malaysians and 532 foreigners are listed under this category.

Meanwhile, The Star also reported PTPTN chief executive officer Agos Cholan as saying that they had to resort to barring the study loan defaulters from leaving the country as they had ignored repeated reminders to repay their loans.

Agos had also reportedly said that to lift the travel ban, defaulters would need to make some payment immediately, with the amount determined by their income. – October 14, 2014.

Source: The Star/Asia News Network

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China's Feng Shanshan wins LPGA Malaysia

 

China's Feng Shanshan posing with the winner's trophy after clinching the Sime Darby LPGA Malaysia golf tournament at the KLGCC on Sunday. - AFP
Video:
https://sg.sports.yahoo.com/video/china-39-shanshan-claims-lpga-102338686.html

KUALA LUMPUR: Feng Shanshan carded a sensational eight-under 63 in the final round to become the first Chinese to win the Sime Darby LPGA Malaysia.

The 25-year-old Shanshan was on fire at the Kuala Lumpur Golf and Country Club (KLGCC) as she fired six birdies and an eagle to finish on 18-under 266, three strokes in front of overnight leader Pornanong Phatlum of Thailand.

The 24-year-old Pornanong could only manage a one-under 70 to finish second on 15-under 269.

Shanshan began the day in joint third, four strokes off the lead. But she grabbed the lead with four straight birdies starting from the 11th hole after Pornapong double-bogeyed the par-three 15th. And by the par-five 16th, it was home free for Shanshan as she eagled the hole for a three-shot lead.

She parred the rest of the way home to pick up US$300,000 (RM977,100) and her fourth LPGA Tour title.

“I played really well today, eight-under, no bogeys. I think the six-under on the back nine was what allowed me to come from behind and take the win,” said Shanshan who will now move up four rungs to No. 5 in the Rolex world rankings.

“Most of my wins have been like this, coming from behind. Even today, I didn’t think I was going to win until the 17th hole,” added Shanshan, whose previous best finish this year was joint second at the Women’s British Open in July.

Shanshan was full of praise for her caddie Mercer Leftwich, who was on the bag for Kang Ji-min when the South Korean won the inaugural title in 2010.

“I have to thank my caddie. He’s got a better record here than me. Now, he has two wins. I met him three years ago here. So this is like our third anniversary ... it’s a special moment,” said Shanshan, who finished second in 2013 and joint 19th in 2012.

Like Shanshan, Sweden’s Pernilla Lindberg also shot a 63 to go from joint 17th to finish tied third on 14-under 270 with South Koreans Chella Choi and Ryu So-yeon.

South Korea’s Choi Na-yeon, the 2011 champion, was sixth on 13-under 271 after a 67.

New Zealand teenager Lydia Ko finished joint eighth on 273 after firing a 70.

World No.1 Stacy Lewis of the United States finished joint 21st on 277 while compatriot and defending champion Lexi Thompson was tied 41st on 283.

By Ashreena Pillai AND Tan Ming Wai The Star/Asia News Network

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Home, sweet home for young couples will lead to housing industry boon in M'sia

A NEW Youth Housing Scheme has been set up by the Government to help young couples, whose household income does not exceed RM10,000, buy their first home.

Prime Minister Datuk Seri Najib Tun Razak said the maximum 35-year loan offered a funding limit not exceeding RM500,000 for married youth, aged between 25 and 40 years old.

“The Government will provide monthly financial assistance of RM200 to borrowers for the first two years to reduce the burden of monthly instalments,” he said.

Najib described the scheme as a smart partnership between the Government, Bank Simpanan Nasional, Employees Provident Fund (EPF) and Cagamas.

The Government will also give a 50% stamp duty exemption on the instrument of transfer and loan agreements, as well as 10% loan guarantee to enable borrowers to obtain full financing, including cost of insurance.

Borrowers can also withdraw from their EPF Account 2 to top up their monthly instalment and other related costs.

“I urge the youth to grab this opportunity which is offered on first-come-first-served basis for 20,000 units only,” he said.

To address the issue of home ow­­nership at affordable prices, RM1.3bil will be allocated to build 80,000 units under the 1Malaysia People’s Housing Programme (PR1MA).

To enable more people to own houses, under the scheme, the cei­ling of household income has been raised from RM8,000 to RM10,000.

“In addition, a Rent-To-Own Scheme will be introduced specifically for individuals who are unable to obtain bank financing,” he said.

RM644mil will be allocated to the National Housing Department (JPN) to build 26,000 units under the People’s Housing Programme (PPR).

He said Syarikat Perumahan Negara Berhad (SPNB) would build 12,000 units of Rumah Mesra Rakyat, 5,000 units of Rumah Idaman Rakyat and 20,000 units of Rumah Aspirasi Rakyat on privately-owned land.

For first-time house buyers, the Government has agreed to extend the 50% stamp duty exemption and increase the purchase limit from RM400,000 to RM500,000.

Exemption will be given until Dec 31, 2016.

The minimum eligibility for hou­sing loans will be increased from RM80,000 to RM120,000 while the maximum eligibility limit will be increased from RM450,000 to RM600,000.

The RM100 application processing fee for housing loan will be abo­lished.

The Government will improve the1Malaysia Civil Servants’ Housing (PPA1M) by reducing the minimum price of houses currently at RM150,000 to RM90,000 per unit.

He added that the qualifying requirement of household income for this would be increased from RM8,000 to RM10,000 per month.

Housing industry boon

PETALING JAYA: Measures under Budget 2015 will positively impact the housing industry, especially in promoting home ownership among the lower and middle income group, said the Real Estate and Housing Developers’ Association Malaysia (Rehda).

The association supported the Government’s effort to raise the ceiling of household income from RM8,000 to RM10,000 for PR1MA homes and the Rent-To-Own scheme to help those unable to obtain financing, said Rehda president Datuk Seri FD Iskandar.

He said Rehda also lauded the new Youth Housing Scheme which would “certainly benefit young couples who wish to own a home.”

He said the 10% loan guarantee to enable borrowers to obtain full financing and the RM200 monthly financial aid would help reduce the burden of borrowers.

HBA secretary-general Chang Kim Loong also said the housing scheme for young married couples was commendable.

However Chang said providing the RM200 subsidy, in the first two-years, may send a wrong message.

He said borrowers may start to spend beyond their means and might end up in financial difficulty after the subsidy ends.

Chang said the Government must also ensure eligible first time house buyers actually stay in these units and not rent it out.

Chang said HBA supported the move to build more affordable housing but wanted these homes to reach the right target market. “These homes must be built at the right place and reasonable prices of between RM150,000 to RM300,000; and not more than RM400,000 in prime locations,” he said.

By Neville Spykerman The Star/Asia News Network

‘First-time house-buyers will spur property market’

GEORGE TOWN: First-time housebuyers are sure to spur the property market following the introduction of the Youth Housing Scheme.

International Real Estate Federation Malaysia vice-president Michael Geh said the scheme announced under Budget 2015 will help them to own property costing less than RM500,000.

He said the property market had been “cool” for the past six months since the developers interest-bearing scheme was abolished, resulting in many first-time buyers unable to obtain bank loans.

“The scheme shows our Government is well aware of the plight faced by this group.

“It will certainly spur the property market,” he said.

The scheme, a smart partnership between the Government, Bank Simpanan Nasional, Employees Provident Fund and Cagamas, is offered on a first-come first-served basis for 20,000 units only.

It offers a funding limit for a first home not exceeding RM500,000 for married couples between 25 and 40 years old with a household income not exceeding RM10,000. The maximum loan period is 35 years.

The Malaysian Association of Hotels Penang Chapter said that the RM89bil from tourism targeted under Budget 2015 was an ambitious figure.

Its chairman Khoo Boo Lim said the RM316mil allocation for various programmes under the Ministry of Tourism and Culture should be used wisely to ensure good returns.

By Tan Sin Chow AND Chong Kah Yuan The Star/Asia News Network

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