Education • Examination • Experience • Ethics

JOURNAL4EKKDN PP 11977/05/2011 (029485) Vol. 11, No. 1, 1Q 2011

T h e o f f i c i a l p u b l i c a t i o n o f t h e F i n a n c i a l P l a n n i n g A s s o c i a t i o n o f M a l a y s i a

Senator Datuk Seri Idris JalaMinister in the Prime Minister’s Department & CEO,Performance Management and Delivery Unit (PEMANDU)

Science, Behaviour, Art and ‘Nudges’

Competent Financial Planners: The Way Towards Professional Acceptance

Three Questions to Help Your Clients Shift Their Retirement Funding Capacity into Overdrive!

www.fpam.org.my

&Towards High-Income

Sustainability

p 18

INDUSTRY

Science, Behaviour, Art and ‘Nudges’

Competent Financial Planners: The Way Towards Professional Acceptance

Three Questions to Help Your Clients Shift Their Retirement Funding Capacity into Overdrive!

ISLAMIC FINANCE

Realising Maqasid Al-Shariah in Islamic Financial Planning

ECONOMY

The Tunisian Effect: Hike in Oil Price Revisited

NEWS IN BRIEF

Making Public Awareness a Top Priority

Public Bank’s new fund to invest in mid-to large-cap stocks in Asia Pacific

CFP CERTIFICATION GLOBAL UPDATESCHAPTER ACTIVITIESCE COURSES

Towards High-Income& Sustainability

“Malaysia has no time to lose,” said Senator Datuk Seri Idris Jala, Minister in the Prime Minister’s Department and chief executive officer of PEMANDU (Performance Management and Delivery Unit). “We need a complete, radical economic transformation. The days of depending on traditional growth engines are over.”

COVER STORY

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In this Issue

Copyright 2011 © Financial Planning Association of Malaysia. All rights reserved. (KKDN PP 11977/05/2011) No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written permission of the publisher. All information provided in this publication are for the purpose of education and keeping the members of the Financial Planning Association of Malaysia and the general public informed of news, developments and direction in the financial planning industry. No article published here is exhaustive on the respective subject it covers and is not intended to be a substitute for legal and financial advice or diminish any duty, statutory or otherwise imposed on persons by existing laws.

CONTENTS

January - March 2011

, CERTIFIED FINANCIAL PLANNER® and are certification marks owned outside the U.S. by Financial Planning Standards Board Ltd. Financial Planning Association of Malaysia is the marks licensing authority for the CFP marks in Malaysia, through agreement with FPSB.

EDITORIAL

PublisherFinancial Planning Association of Malaysia

EditorDennis Tan

Managing Editor Steven K C Poh

AdvisorSteve L H Teoh

Editorial PanelTan Beng Wah

K P Bose DasanKong Kim Heng

Maznita Mokhtar

Administration & AdvertisingV. Murugiah

Consulting Produceri2Media Sdn Bhd (493346-K)

Suite 10-01, 10th Floor, Block A,Damansara Intan,

No.1, Jalan SS20/27,47400 Petaling Jaya,

Selangor Darul Ehsan.

PrinterMr Print Sdn Bhd (577080-H)

Lot 21, Jalan 4/32A, Off Batu 6 1/2,Mukim Batu, Jalan Kepong,

52100 Kuala Lumpur.

The 4E Journal is published quarterly by the Financial Planning Association of Malaysia. Opinions and views expressed in the 4E Journal are solely the writers’ and do not necessarily reflect those of the Financial Planning Association of Malaysia. The publisher accepts no responsibility for unsolicited manuscripts, illustrations or photographs. All manuscripts and enquiries should be addressed to:

The Editor, 4E Journal, c/o Financial Planning Association of Malaysia, Unit 1109, Block A,Pusat Dagangan Phileo Damansara II,No.15, Jln 16/11, Off Jalan Damansara,46350 Petaling Jaya, Selangor. Phone: +60-3-7954 9500 Fax: +60-3-7954 9400

Editorial Board

www.fpam.org.my

Planning to Live LifeDear Members,

The Financial Planning Association of Malaysia (FPAM) would be having its 11th annual general meeting (AGM) this year at the Bukit Kiara Equestrian & Country Resort on May 21. In addition to the routine matters, there would also be an election of the Board of Governors for the coming term.

By now you would have all received the notice of the AGM as well as the letter inviting nominations for the various positions on the Board of Governors. I hope all of you would make it a point to attend the AGM, and in the process vote for your preferred candidate to the Board.

On that same day, we would also be organising a graduation ceremony for all the members who have obtained their ‘Certified’ status in 2010. This is scheduled to take place before the AGM so that the newly Certified members can attend both events. Our congratulations to all the graduating Certified members for having successfully complete the rigorous exams and meeting all the necessary requirements on ethics and experience as well.

Our cover story features Senator Datuk Seri Idris Jala, Minister in the Prime Minister’s Department and CEO of Performance Management and Delivery Unit (PEMANDU). As the man entrusted with ensuring that the government’s socio-economic transformation programmes (both the Government Transformation Programme and the Economic Transformation Programme) achieve the desired results, his views and insights are particularly pertinent especially as they relate to the financial services sector of which we are all part of. Check out the discourse … you won’t want to miss it!

To facilitate forward planning, members would be pleased to know that the 2011 continuing education (CE) course calendar has been finalised till year end. We would be adding on new programmes as we go along, and the details would be published quarterly in the 4E Journal and our website.

I am also proud to announce a new addition to the FPAM family – First Sovereign Advisory Sdn Bhd – who joined us recently as a Corporate member. We welcome FSA on board and hope it will lead to a long and mutually beneficial relationship.

I am also pleased to once again welcome U Chen Hock to the Board of Governors and Ong Eu Jin to the Board of Certification and Standards.

In the first quarter of the year, the world has witnessed some dramatic developments. The upheaval in the Middle East and the natural disasters in Australia, China, New Zealand and Italy and lately, of epic proportion, in Japan will no doubt have an economic impact that will have a bearing on us as financial planners to our clients. There is much to do, planning-wise, for our clients, especially when there is so much volatility and uncertainty.

On a personal level, I would like to extend our deepest sympathies (on behalf of FPAM) to those who have been tragically affected by these disasters. FPAM, as part of the Financial Planning Standards Board (FPSB) fraternity is linked to a worldwide network of national affiliates including a number of whom are in the affected countries. Our heartfelt sympathies are with them and we wish them a speedy recovery.

Life’s so frail, live it now!

Wong Boon Choy, Presidentpresident@fpam.org.my

TM

The 4E Journal 5

Science, Behaviour,Art and ‘Nudges’By Jonathan Guyton, CFP®

Lately, I’ve found myself thinking about the powerful opportunities we have as financial planners for

our specific advice — and the manner in which we deliver it — to have a significant behavioural influence on the quality of our clients’ lives.

Going beyond the left-brain analytics of traditional financial planning to facilitate such an outcome is no easy task. To do so requires us to meet clients at the place of their past experiences, viewpoints, values, and, yes, biases. To expect them to see things as we do is to create a gap between us into which even the best financial planning science can fall, unimplemented.

Among other things, this means we must be in tune with the key aspects of our client’s history and relationship with money. We must advocate for those future scenarios that will most honour their values and are least likely to trigger the fears and self-sabotaging behaviours that can violate them. Both style and substance matter.

Clients’ past experiences create the “stories” they tell themselves that in turn become the prisms through which present events are framed — often in highly unhealthy ways. And the rigidity of this framing can lead to more stories about the future that can have the potential to violate their most precious values, a sure recipe for an unhealthy situation at many levels.

Fortunately, occasional moments present themselves in nearly every advisory relationship when this all comes together and breakthroughs can occur … if we are alert and have the skills to see such

moments for what they are. In the words of Thaler and Sunstein1, such moments are ripe for a “nudge.”

Scarcity

One of the most harmful of these “stories” involves the notion of scarcity. This can take many forms, but it frequently shows up as a (perceived) scarcity of financial resources or as a scarcity of time. A fear that there won’t be enough.

This most often occurs as a fear that life will either end too late or too soon. The former is a fear of outliving one’s money; the latter is a fear that the ability to live a worthwhile life will be cut short. And, as most of us know, the presence of both fears in a couple can be an insidious combination because each spouse feels justified in his or her fears and it sets up the poisonous proposition that one spouse’s concerns can only be addressed at the

expense of the other’s. Of course, this is all in their framing, but this framing is their reality. Unless some movement can be sparked and their framing expanded, here they are likely to remain.

Stuck.

Just like Cass and Becky are. Our sample couple’s lives have transitioned to include more flexibility to travel and be with their grandchildren living around the country now that Cass has wound down his consulting business. Despite this new freedom, Becky is worried. “My grandmother had to sell her house after my grandfather died when her pension and Social Security got cut in half,” she said. “And my parents didn’t save enough; they’re well on their way to foolishly spending through their principal. I don’t want that to be us.”

Things look different to Cass. “My side of the family usually sees a significant health decline by their early 70s. If we don’t live for today while we can, opportunities will pass us by.” Is it any wonder that Becky’s

INDUSTRYJanuary - March 2011

1 Thaler, Richard H. and Cass R. Sunstein. 2008. Nudge: Improving Decisions About Health, Wealth, and Happiness. New Haven: Yale University Press. The authors also have a blog at http://nudges.org.

6 The 4E Journal

family financial history colours her sense of long-term financial security and links it to “prudent” spending decisions in retirement, while Cass keeps wanting to tap their nest egg for extra distributions

“while we still can”? Scarcity fears seem firmly entrenched.

What is our role as planners when we encounter views of life thus framed by scarcity? First of all, both spouses are right: Becky’s conviction that spending policies play a significant role in the long-term level of financial security is supported by financial planning theory, and Cass’s sense that the failure to pursue dreams is a sure formula for regret resonates as well. The fears at the foundation of these views fester and spill over into their relationship and quality of life. As planners, we might soon see ourselves as either an arbitrator in a dispute or the bad cop in a zero-sum game. Unless we can change the rules.

Appreciative Inquiry

Clearly both Becky and Cass deserve to be honoured for their experiences and the life-views they have created, even if they cannot (yet) do so for each other. And this must happen before any alternative re-framing or solutions are offered. I might say to them, “You are both right. I completely understand why you feel the way you do. How could you not based on what you know? Cass fears the regret from not enough quality of life, and Becky fears the stress and consequences from too much quantity of life. That’s a tough one, and it happens with couples more often than you’d think.

If only one of you had paid me off before the meeting, I could now take your side and tell your beloved they are wrong.” (Believe it or not, sometimes the humour of the absurd can illuminate the “stuck” tension just enough to create an opening for clients to break free from their self-sabotaging storytelling.)

However, far more important than anything we can say, couples need to talk to each other. Appreciative inquiry can be a powerful approach in such

circumstances. We can ask them to reflect on their own life experiences to find an appreciation for the other’s framing. Perhaps Becky has felt the pang of regret over a missed opportunity. Maybe Cass has felt the gut-wrenching of having to choose between various necessities of life. If so, or at least if they can empathise with each other, the opportunity to honour their respective life-views via a reframed planning strategy now has the potential to also reach more deeply into their lives.

Core and Discretionary Portfolios

In this situation, we often rebrand clients’ overall investment portfolio into two distinct components, “core” and “discretionary” (or, as one of our clients delights in calling it, slush). Each component has its own purpose, policies, and underlying portfolio allocation. One of our retired clients has called this approach, “The best advice you’ve given us in our 10 years of working together.”

Along with any pension, Social Security, or other on-going reliable income, the core portfolio’s purpose is to fund on-going living expenses, including travel and entertainment, for the rest of the clients’ lives in an inflation-adjusted manner that is safe and sustainable. It has its own underlying withdrawal policies, ideally laid out in a withdrawal policy statement such as I wrote about in this Journal last June and spoke about at FPA’s annual conference last fall.

These withdrawal/spending policies need to be specific and disciplined; past research has shown that such disciplined withdrawal policies are the ones with the bullet-proof probabilities of success. Taking additional distributions outside

these policies can quickly put chinks in the armour of financial security and diminish a retirement plan’s security. Typically, the core portfolio consists of 85 percent to 95 percent of total investment assets, obviously depending on the after-tax cash flow it needs to fund. In a nutshell, this addresses Becky’s concerns.

The discretionary portfolio’s purpose supports Cass’s viewpoint. These funds are to be used both spontaneously and by design for expenditures beyond core needs for which the clients deem it worthwhile to tap these assets. That is the key: for which they deem it worthwhile. Moreover, it shifts the question, “Is it okay to take this extra one-time withdrawal?” from the planner (who can’t know because details about future “one-time” withdrawals are unknowable) to the client (who is empowered to make this choice based on priorities, timing, and values).

Now, with their core lifestyle securely funded by other resources, a freeing conversation can ensue as to how these resources might be deployed to enhance their quality of life. Dreams, values, and bucket lists can drive decisions rather than fear, guilt, or manipulation. Policies and plans for these assets can emerge. We are free to watch what clients do and to support their emerging choices without worry about what they might do next. The rules of the game have changed!

“However, far more important than anything we can say, couples need

to talk to each other. Appreciative inquiry can

be a powerful approach in such circumstances. “

“Past research has shown that disciplined withdrawal policies are the ones with the bullet-proof probabilities of success. “

Couples need to talk to each other.

The 4E Journal 7

Strategically, the discretionary portfolio is ideally funded at least in part with non-qualified or Roth IRA assets, though this is not essential. It is important for clients to know that this fund should only be replenished with unused withdrawals from the core portfolio or unanticipated inflows of capital such as an inheritance. Asset allocation should be determined through conversations, with higher anticipated withdrawals in the next three to five years prescribing a higher portion of fixed-income holdings.

support needed to foster healthy family relationships. His father had not done so, and that experience left its mark.

For her part, it mattered deeply to Lauren that Kerry would be able to retire at an age that would still allow them to pursue their bucket-list items, including extended periods of travel. Accelerating payments to eliminate the mortgage in 10 years was congruent with their values. And their planning was in good shape to sustain their future mortgage-free lifestyle from that point on.

plans to pay for it. Kerry stated that if he felt confident in their plan to pay the mortgage, he could see himself retiring before it was paid off.

With their values affirmed and now reframed in light of their circumstances, we proposed a seemingly unconventional strategy: lock in a modest on-going cash flow requirement by refinancing the remaining US$155,000 balance to a 30-year mortgage and continue to make aggressive pre-payments as their incomes allowed. Their slightly lower interest rate paled in comparison to the pressure relieved by the nearly US$1,100 reduction in their required payment. Kerry came to see that this US$785 obligation would not over-burden their retirement years, and Lauren liked the potential for reduced financial stress and the honouring of their original retirement time frame.

From a left-brain perspective, this is not rocket science, and it is a fair question why they didn’t refinance with a 15-year loan. The key, though, was the conversations in the six months between our initially addressing this situation and when Kerry embraced the new strategy. In fact, it was Kerry’s momentary hesitation at the US$350 higher 15-year payment that tipped the scale in terms of which approach would most honour their values and accomplish their goals.

“Asset allocation should be determined through

conversations, with higher anticipated withdrawals in the next three to five years

prescribing a higher portion of fixed-income holdings. “

“It is often in the slight pause or the furrowed brow or the sigh of acknowledgement when the art and science of our craft come together. “

One of Kerry’s primary values was to provide a mortgage-free home for himself and his beloved when

they retired.

Back in 2005, making the US$2,700 monthly payment necessary to accomplish this looked quite feasible. For the next few years, they stayed true to their plan. Then Lauren changed jobs to a more-satisfying but lower-paying position and Kerry’s income declined in the depressed housing market in which he worked. Cash flow was tight, and by early 2008 they could no longer make the extra mortgage payments; they needed both incomes to afford the US$1,850 required payment of the 15-year loan that was now unlikely to be paid off until 2019 when Kerry would be 75. Life stress rose sharply as their new financial reality frayed the fabric of their core values.

Our response was to initiate a conversation with Kerry and Lauren about what really mattered to them in this unanticipated situation. Lauren shared that Kerry’s increased stress was worrying her and that her paramount concern was for the quality of their life together. Both agreed that they wanted to continue living in their house, even if it meant revising their

This solution hinges on turning an “either/or” scarcity-based confrontation into a collaborative “both/and” approach. Surely, the core/discretionary bifurcation could have been presented without the preceding dialogue I described, but then it might have only minimised the tension rather than shifted the dynamic to a new plane.

A Values Focus

Sometimes, however, a series of events produces material and behavioural changes in circumstances that can put a key aspect of even the most conscientiously designed plan at risk. Even in times like these, with skill, grace, and good fortune, that moment of transformation may also appear.

Take the case of Kerry and Lauren. Though 11 years apart in age, Kerry and Lauren met as single parents while regularly attending their sons’ athletic events. They fell in love, began creating a wonderful life together, eventually married, and bought a new home, financed with a 30-year mortgage. In 2005, with interest rates having fallen, they refinanced to a 15-year loan. At that time, they were 61 and 50.

One of Kerry’s primary values was to provide a mortgage-free home for himself and his beloved when they retired in about nine years. I knew how important this was to him from prior conversations that revealed how closely he linked such financial responsibilities with the care and

For me, this was a key reminder. It is often in the slight pause or the furrowed brow or the sigh of acknowledgement when the art and science of our craft come together to make the whole so much greater than the sum of its parts.

Cue the “nudge.”

The author is principal of Cornerstone Wealth Advisers Inc., a holistic financial planning and wealth management firm in Edina, Minnesota. He is a researcher, mentor, author, and frequent national speaker on retirement planning and asset distribution strategies, and a former winner of the Journal of Financial Planning’s Call for Papers competition. Reprinted with permission from the February 2011 issue of the Journal of Financial Planning.

The Way Banking Should Be

The Way Banking Should Be

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The 4E Journal 9

Competent Financial Planners:The Way Towards Professional Acceptance

We live in exciting times but it is getting every bit challenging. And the profession of financial

planning is trying to fit in – into various scenarios in the financial services environment. Financial services have always been there but the traditional approaches are changing by the minute. The problem arises when individuals and institutions try to hold on to their old ways and turfs and try very hard to thwart the progress of new ideas and processes. It will be difficult to present an organised, methodical, and empirical analysis of the situation especially since it is a very demanding task and secondly I must confess, I do not possess the intellectual might to present such a comprehensive analysis.

Management gurus will try to find a chart or diagram like a triangle or circle

to present their approach and say this is the situation and this is the way out. I have no such tool, but financial planners can always start with the client.

And speaking of clients, what does the client actually want?

He perhaps wants to know, “are you the right person to talk to about his personal finances.” Let us say we successfully crossed that hurdle and the professional CFP certification had helped. He was curious as to whether there was a license involved to practise financial planning. Bang! We are thrown into some murky waters. The Securities Commission has through its 2007 Capital Markets Services Act made financial planning a regulated, licensed activity. Thus I had to show my client my CMS Representative License from the Securities Commission. As a CMSRL representative, I had to also let him know my principal company through which I am licensed.

He was duly assured that I was not just another agent selling insurance or unit trusts. The client was happy there was a differentiation. He now has the hope and expectation that I can deliver a deeper and more meaningful or perhaps comprehensive solutions to assist him in his personal financial matters. I had to quickly ask him if he was just looking

to buy insurance or unit trusts. He said perhaps, but he wants his situation analysed first and wants to know what is appropriate for him. This is the first match between the financial planner and the client.

Clients are generally aware that they need insurance or that they need to put some money into a good performing unit trust. But they may not be looking for a comprehensive financial planner. But this client wanted his financial position analysed first and also wanted to know what would be the most appropriate products for him to achieve some of his personal financial goals. He was also hoping that I could advise him on better ways to manage his personal finance and to find ways to improve his cash flow. He also slipped in the question if I was an independent financial planner with a wide array of financial products to choose from.

I gasped as to how to answer him. Yes, as an independent financial planning firm, my company has a variety of products from various vendors and manufacturers to choose from. It even has some prominent market players in insurance and investments, but not all of them are represented. But I assured him that we had a fairly wide range of products to choose from. My honesty appealed to him.

INDUSTRYJanuary - March 2011

By K P Bose Dasan, CFP®

“The problem arises when individuals and

institutions try to hold on to their old ways and

turfs and try very hard to thwart the progress of new ideas and processes.”

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10 The 4E Journal

But here’s an issue that has been around since financial planning came to Malaysian shores: are agents correctly distinguished from licensed financial planners? All insurance and unit trust agents sit for an exam to pre-qualify them to handle insurance or investment products. That is the depth of their academic requirement, but it must be said in all honesty that the financial institutions have good training programmes and have a system of nurturing agents through their multi-level agency supervision.

Some institutions equip their agents with materials and software to help them present their products in the best light to their clients. Therefore, tens of thousands of agents are out there handling the proprietary products of these financial institutions. They interest their clients in a variety of ways, but principally they appeal to their clients’ need to insure or invest for some general goal or objective. So the question now is: how different is this approach to that of a financial planner? To make matters even more serious, there are only a few hundred licensed financial planners in the marketplace when compared with the tens of thousands of agents out there.

In this context, it would be good to look at the definition under the CMSA 2007 with regard to financial planning. As per CMSA 2007, Schedule 2, Part 2: “financial planning” means analysing the financial circumstances of another person and providing a plan to meet that other person’s financial needs and objectives, including any investment plan in securities, whether or not a fee is charged in relation thereto.”

This definition implies that to analyse the financial circumstances of another person and to come up with a plan you need an SC license. It does not matter if you charge a fee or not. Therefore a clear distinction between a financial planner and an agent is that the financial planner makes it a point to analyse the financial circumstances of a client and propose a plan, written or otherwise, to help client achieve his financial need or objective.

An agent can be assumed to be only interested in representing his company’s product and perhaps go straight into the product presentation without analysing his client’s financial circumstances. It can be assumed that the product meets a general need like risk or investment and there is no attempt to provide a plan.

This is where it hits a snag. Good agents who want to do a good job want to analyse the client’s financial circumstances before offering an investment plan albeit with their company’s proprietary products. Are these agents then in the CMSA territory? Such is the confusion in the marketplace. It is perhaps good that the Securities Commission has not hauled up anybody for violating the CMSA provisions, which I believe it can if it wants to truly enforce this definition. The penalty for violating this provision is RM5 million or five years in prison or both.

That being the case, you can now understand my humble apology that I do not have the intellectual might to decipher what ails in our current legal situation and what can be done to simplify things. To make matters more interesting, there are many agents who have the globally

recognised professional certification – CFP – and who are still tied to a particular company. Then there are those who are qualified CFPs who are just keen to promote products without analysing the financial circumstances of the client and coming out with a written plan. There are also many CFP qualified relationship managers who work for banks and provide private banking services under the auspices of the bank and perhaps outside the ambit of the CMSA. In other words, there are many things that need to be ironed out before we can actually see a clear passage for financial planners.

To add a spanner to the works the insurance fraternity has coined the professional term “financial adviser” as their own and now you need a license to call yourself a financial adviser.

“Financial advisory business” in the insurance industry means any or all of the following services:

• analysing the financial planning needs of a person relating to insurance products

• recommending the appropriate insurance products

• sourcing insurance products from a licensed insurer

• arranging of contracts in respect of insurance products

• other financial services as prescribed by the Central Bank.

• You can now imagine the plight of a financial planning practitioner. To handle multiple insurance products, you need this financial adviser’s license. Fortunately both regulatory agencies have made things easier by coordinating the requirements for both licenses. However, the fact remains that you need two licenses and compliance with two regulatory agencies to practice financial planning. To me, this is a magnificent example of “Malaysia Boleh.”

A social economist might be interested to find out what is going on in the Malaysian financial services environment given

“The client only wants a good job done for him, effectively see his debt paid off or watch his money grow. He needs to be impressed by what the planner can do for him.”

The 4E Journal 11

personal financial objectives. He wants the financial planner to monitor the performance of his strategies and see that he is on track to achieving his goals.

Therefore there is a public face to all the things being discussed here. The public does not want to be confused. They can, with some certainty, identify a doctor or a lawyer but he needs to be sure about his financial planner or adviser who is going to handle his personal finance and add value to his wealth. Perhaps it is worth noting that doctors and lawyers go through a period of post qualification training called internship or chambering. The financial planning profession does not have this structure. The time has come, perhaps to thrash out the bigger picture and take the industry firmly forward towards 2020 to meet the government’s economic transformation initiative and achieve high-income and developed country status.

While the laws are being straightened out, the licensed financial planners can start the ball rolling by improving their competency level. By achieving higher competency, they can win the client’s trust and patronage. Their efficacy and efficiency will spiral a word of mouth promotional blitz and in the future it can be assumed that most affluent clients will only want to talk to qualified and licensed financial planners.

In this regard, I urge all planners and advisers to read the document prepared

this dichotomy between insurance and investment, and the attempt to license the less than a thousand financial planners but to allow the freedom to the tens of thousands of agents to ply their trade.

What is the big picture and what is the goal of the regulators? I suppose financial institutions do wield some clout. We may have to let things evolve or decay as no one has a clue as to where the law and practice of financial planning is going and what the final outcome is going to be.

The new initiatives by the Economic Planning Unit (EPU) under the leadership of the Prime Minister have drawn plans to build wealth management as one of the key areas for the new Economic Transformation Programme (ETP). Who will promote wealth management and its human capital development? We can’t even come to terms with whether a wealth manager is free of any restriction from being licensed as a financial planner or financial adviser. Do wealth managers need a license?

Of course, the client is not interested in the trail of discussion that I have taken the reader through. He only wants a good job done for him, effectively see his debt paid off or watch his money grow. He needs to be impressed by what the planner can do for him. He wants the assurance that all or any product recommended will do its stated job and help him achieve his

“The new initiatives by the Economic Planning Unit (EPU) under the leadership of the Prime Minister have drawn plans to build wealth management as one of the key areas for the new Economic Transformation Programme (ETP).”

by the Financial Planning Standards Board (FPSB) with regard to the accepted competency levels and the practical knowledge and skill sets expected of a CFP professional. Passing the exams is only one of the four pillars. Experience, ethics and continuing education are important prerequisites to remain relevant to the financial planning industry. Let us rise to the challenge of bringing economic transformation through expert wealth management by CFP professionals.

The author is a tax consultant and a certified financial planner licensed as an investment adviser (financial planning) representative with Standard Financial Planner Sdn Bhd.

12 The 4E Journal

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The 4E Journal 13

ISLAMIC FINANCE

January - March 2011

Realising Maqasid Al-Shariah in Islamic Financial Planning

Maqasid Al-Shariah is the guiding principle of determining any Islamic law that is widely used

in areas revolving around the Muslim way of life. And the objective of Shariah is to ultimately achieve maslahah and to uphold the interest of the public at large in this world and the hereafter. It deals with the prioritisation in Islam to safeguard the purity of the religion, mental, life, property and offspring of mankind.

In facing or solving current issues either directly or indirectly touching the social, economic, political and financial spheres, the application of Maqasid Al-Shariah is an important element that needs to be incorporated by all Muslims in their lives.

This article attempts to define the Maqasid Al-Shariah and examine the ways of realising the noble objectives of Shariah in all aspects of Islamic wealth planning – wealth creation, wealth generation, wealth purification, wealth protection and wealth distribution. It also looks at the implementation of these scopes of work in Malaysia. This exercise is not to determine what is halal or haram, but to ultimately achieve al-falah – to be successful in this life and the hereafter.

The Objectives of Maqasid Al-Shariah

The concept of compassion and guidance are part of Shariah’s objectives which are declared in the Quran, “We have not sent you but a mercy to the world”- (21:107) and “A healing to the (spiritual) ailment

of the hearts, guidance and mercy for the believers (and mankind)” – (10:57). It seeks to establish justice, eliminate prejudice and alleviate hardship. It promotes cooperation and mutual support within the family and society at large. This ensures the preservation of public interest (maslahah) as the objective of the Shariah which Islamic scholars have considered for all intents and purposes synonymous with compassion. Shariah identifies three areas, which constitute the component part of Rahman, namely promoting maslahah to the people, educating individuals1 and establishing justice.

The objectives and the rationale of the Shariah are promoting maslahah (benefits) to the people, concerning their affairs both in this world and the hereafter. It also aims to prevent people against mafsadah, for example, corruption and evil, as illustrated from the following verse: “And perform al salat. Verily, al salat prevents from al-fahsha

(i.e. great sins of every kind, unlawful sexual intercourse, etc.) and al-munkar (i.e. disbelief, polytheism and every kind of evil wicked deeds, etc.).” – (Al Ankabut: 45). Please refer to diagram above for the explanation of maslahah and mafsadah. The classifications of Maqasid Al-Shariah will be explained later to relate to the Islamic financial planning practice.

Islamic Financial Planning – Current Practice in Malaysia

Islamic financial planning was introduced in Malaysia in early 2001 by a group of Shariah advisers and practitioners. The crux of an Islamic financial planning practice is the planning itself whereby the planners need to analyse, organise and implement the financial affairs of clients with the objective to achieve al-falah and hayatan toyibah. And in line with the requirements of Shariah, the drawing up

1 Muhammad Hashim Kamali, Principles of Islamic Jurisprudence, p. 334

Minor MaslahahRejected

Minor MaslahahRejected

EvilPreventing

MMMafsadah Muslahah

Preventing evil prevail

Bene�tPromoting

Maslahah and Mafsadah

Source: Dr Ahcene Lahsasna (INCEIF) – Lecture on Maqasid al Shariah

By Ruslinda Sulaiman

14 The 4E Journal

of the financial plan should be embedded with Islamic values and principles.

Planning for one’s life, whether for material gains or spiritual, is considered as an ibadah in Islam. In the story of Yusof, the Quran relates a 15-year economic plan that was put into action to thwart a disaster, “Ye shall sow seven years as usual, but that which ye reap, leave it in the ear, all save a little which ye eat. Then after that will come seven hard years which will devour all that ye have prepared for them, save a little of that which ye have stored. Then, after that, will come a year when the people will have plenteous crops and when they will press (wine and oil).”

It was the planning and storage of wheat and the keeping of fine seeds and good stalks of wheat that kept the country going during the seven-year drought leading to the abundant harvest in the fifteenth year. The keeping of good ‘stalks’ of wheat can be likened to the keeping of good ‘stocks’ with strong fundamentals. The ‘value’ seeds and stalks were preserved in the first and second seven-year cycle and re-invested to generate the abundant returns in the fifteenth year. This ayat shows that we need to work in order to earn, to spend wisely what has been earned and finally to save some for future.

Planning is a continuous and life-long process and not an ad hoc affair. Muslims are encouraged to plan for their life and achieve their goals by their own efforts. The final stage is tawakal (accept the result as destiny bestowed by Allah).

In Islam, financial planning is not merely a process of acquisition and accumulation of wealth. It has a broader definition and is related to the concept of vicegerency (khalifah). Allah has given His bounties to all mankind, and as a trustee, man has to administer this trust properly. Earning and spending should be in compliance with His covenants. Allah affirms: “For Allah is He Who Gives (all) sustenance …” (Al-Dhariyat 51:58).

The concept of Allah’s bounty is considered very important in Islam as a good Muslim is required to have a proper balance between the fulfillment of his spiritual and worldly obligations.

As the Prophet put it: “A Muslim should prepare himself for the next world as if he is going to die tomorrow, but at the same time work hard to improve all his worldly comforts as if he is going to live forever.” (Narrated by Al-Dailami)

The financial planning dimension in Islam covers five areas. They are: wealth creation, wealth generation, wealth purification, wealth protection and wealth distribution.

Wealth Creation

Wealth in Islam is rizq that connotes subsistence or means of living. This means of living is not necessarily an outcome of man’s effort. It is an endowment from Allah because He is the one who sustains mankind’s life. The effort of mankind is considered as a process, which will consequently lead to either positive or negative results. Everything on earth has been created for mankind. In the Quran, we are told time and again, that God is the real owner.

“… and God has made for you in your homes and abode and has made for you tents out of the hides of cattle for dwelling which you find so light and handy when you travel and when you stay; and of their wool, fur and hair furnishings and articles of convenience and comfort.”

The above verses show us that the creation of wealth is not due to our effort but that God is the one that has made it possible. Upon the availability of resources available, Muslims are encouraged to earn their living through halal income and with this income, they should be able to provide not only the basic necessities of their life but also things that would make their life in this world more comfortable.

Wealth Generation

In conventional financial planning, the word “accumulation” is widely used

to describe the creation of additional wealth. In Islam, the word accumulation is replaced with the word “generation” as it is more akin to the Islamic concept that implies that wealth is already there and its utilisation would bring more wealth.

The Quran says, “They who accumulate gold and silver and spend it not in the way of God, unto them give tidings of a painful doom. On the day when it will (all) be heated in the fire of hell, and their foreheads and their flanks and their backs will be branded therewith (and it will be said unto them): Here is that which ye accumulated for yourselves. Now taste of what ye used to accumulate.”

Wealth generation is very much encouraged by Islam. Among others, the Quran says, “Give not unto the foolish (what is in) your (keeping of their) wealth, which Allah hath given you to maintain; but feed and clothe them from it, and speak kindly unto them.”

This verse was revealed to remind those who are the guardians of orphans to manage the assets of their wards properly and efficiently.

Wealth should be lawfully generated and lawfully spent. In the hadith, the Prophet mentioned the use of wealth before poverty. The use of wealth before poverty means to use one’s wealth to generate enough income (through investments) to face uncertain and hard times ahead.

Wealth, in Islam, must not be kept idle, but should be invested. The hoarding of money is not allowed in Islam. For example, if gold is kept idle, one must pay zakat on the idle gold. In the hadith, the Prophet said, “Whoever develops an idle land, it belongs to him.” (Sahih Bukhari). Islam has laid down clear injunctions on how Muslims should generate their wealth through Shariah-compliant products where riba, maisir and gharar are to be avoided at all times.

Wealth Purification

Wealth needs to be purified for two reasons:

• to cleanse it from illegal income one may have unknowingly earned

• to give part of one’s wealth to others (8 asnafs)

In Islamic terms this is called zakat or compulsory alms. The Quran says, “Take alms of their wealth, wherewith thou

WealthCreation

WealthGeneration

WealthPuri�cation

WealthProtection

WealthDistribution

“Planning is a continuous and life-long process

and not an ad hoc affair. Muslims are encouraged to plan for their life and

achieve their goals by their own efforts.”

The 4E Journal 15

mayst purify them and mayst make them grow, and pray for them. Lo! thy prayer is an assuagement for them. Allah is Nearer, Knower.”

Wealth purification is very important in the overall financial planning process as the Prophet had said, “Whoever is made wealthy by Allah and does not pay the Zakat of his wealth, then on the Day of Resurrection his wealth will be made like a bald-headed poisonous male snake with two black spots over the eyes. The snake will encircle his neck and bite his cheeks and say,

‘I am your wealth, I am your treasure.’”

The payment of zakat is the third pillar of Islam and it is considered an obligatory charity for the Muslim. It is often said the return given by Allah SWT (SWT is from Arabic meaning subhanahu wa ta’ala which translates as ‘glorified and exalted’) for giving zakat is huge indeed, a 70,000 percent return on one’s investment.

In this respect, the Quran has this to say, “The likeness of those who spend their wealth

in the way of God, is as the likeness of a grain of corn; it grows seven ears, and each ear has a hundred grains. God gives manifold increase to whom He wills.”

Zakat helps the poor and the needy to live and it is useful for the development of the economy. The sharing of wealth with others will create harmony, love and unity in the Muslim society.

Wealth Protection

In conventional practice, wealth protection relates to mitigating risk through insurance, whilst in the Islamic practice, it is done through takaful participation. Takaful is a way to reduce the financial risk of loss due to accident and misfortunes. Takaful literally means mutual guarantee and solidarity – participants cooperating to guarantee each other against a defined loss. Risk, in this case is shared, not transferred.

Managing risk is encouraged in Islam especially in trying to reduce risk against loss and calamities, as illustrated in a hadith related by Tirmidhi: One day the Prophet Muhammad SAW noticed a Bedouin leaving his camel without tying the animal. He asked the Bedouin,

“Why don’t you tie down your camel?” The Bedouin answered, “I put my trust in Allah SWT.” The Prophet SAW (Sal Allaahu Alayhi wa Sallam) then said to the Bedouin, “Tie your camel first, then put your trust in Allah.” Tying the camel is an act to reduce the risk of the camel running away. The urging of the Prophet for the Bedouin to tie

down the camel clearly demonstrates the Islamic position on risk management.

Wealth Distribution

Wealth distribution deals with what a Muslim leaves behind upon death and how he should plan his estate according to Shariah. Proper planning will help a Muslim to distribute his wealth according to his wishes. One-third of his estate can be distributed according to his wishes while the other two-thirds would have to be distributed according to hukum faraid. Wealth distribution in Islam has its own rules that must be followed. The law is obligatory to be followed, especially by the heirs of the deceased Muslim.

The salient features of the Islamic law of distribution are2:

• A son’s share is equal to that of two daughters.

• The following Quranic heirs are entitled to the following shares.

It was mentioned in the hadith that it is not right for a Muslim who has properties to bequest that he should pass two nights

without having his will written down. Having a will is highly recommended for Muslims due to the complexity of estate administration laws in Malaysia. The process is very time consuming and this can be burdensome to the dependents

– especially if it involves infants, elderly parents or disabled child. Estate distribution for a Muslim will involve the settlement of all funeral expenses, debts, any claims of matrimonial assets and disposition of one-third of the assets to non-heirs. Only upon completion of these settlements, can the division of the residuary estate in accordance to the faraid principle be done. Proper planning will eliminate hardship and ensure the continuity of the dependants’ livelihood without any disruption.

Application of the Maqasid Al-Shariah in Financial Needs Analysis

One of the most important aspect/process in developing a holistic financial plan is the financial needs analysis (FNA) process. In classifying and prioritising the needs of a Muslim in his financial plan, the concept of Maqasid Al-Shariah must be upheld at all times. These needs should not

2 Azman Ismail, Islamic Financial Planning - Module 5

Quranic Heir

Husband

Wife

Daughter(s)

Mother

Father

Condition

If the wife does not leave childrenIf the wife leaves children

If the husband does not leave childrenIf the husband leaves children

If she is the only childIf there are two or more daughters and no sons

If the parents are the only survivorIf there are spouse and children

If the parents are the only survivorsIf there are spouse and children

Share

1/21/4

1/41/8

1/22/3

1/31/6

1/31/6

“Tie your camel first, then put your trust in Allah.”

16 The 4E Journal

transgress the dictates of Islam. They must adhere to the teachings of the Quran and the Sunnah in order to gain God’s blessing and barakah as mentioned in the Quran

“… and we revealed to thee from the Quran as a form of healing and mercy to mankind in all facets of their lives ….”

All Muslim regard life on earth as temporary and life in the hereafter as everlasting. A good Muslim is, therefore, required to have a proper balance between the fulfillment of his spiritual and worldly needs. Nevertheless, whilst we are here on earth, the need to be able to provide for one’s financial needs is a responsibility for all Muslims, especially so for Muslim men/husbands and fathers. In deciding what is important and what needs to be fulfilled, the level of necessities provided by the Maqasid Al-Shariah has to be observed at all times.

The objectives of Shariah can be divided into three levels of necessities:

The Essentials (Al Daruriyyat)

The most fundamental necessities – vital for the physical and spiritual well-being of an individual and his family – basic needs like food, clothing, shelter and education. Hence, when deciding which financial needs to be realised, these five values need to be considered and to be prioritised accordingly:

The protection of the five values are essential to ensure normal order in society as well as to the physical and spiritual well-being of individuals, so much so that necessary measures are needed to remove all the obstacles that would obstruct the realisation of these values.

• Protection of Religion (Al-Din)A Muslim has to strengthen his faith in Allah by observing different kind of needs in ibadah to increase his iman. For example, the paying of zakat is much more divine than giving sadaqah or the need to perform the haj is more desirable than performing umrah or to go for vacation elsewhere. Also, debt settlement is critical because a debt, if not paid back in full, will result in the debtor’s soul hanging in the hereafter and will not be accepted by God. And all non-Shariah-compliant products (conventional banking/insurance) are to be avoided at all times.

• Protection of Life (Al-Nafs)Diseases and illnesses can directly affect human well-being and in some cases the presence of life itself. They are, therefore, considered threats to life and it is of great importance to a Muslim to take care of his welfare by leading a healthy lifestyle. The need for takaful coverage for dreadful diseases and hospitalisation is indeed desirable so as to receive the best medical care if one has to face a deadly disease.

• Protection of Dignity or Lineage (Al-Ird)When you have found a suitable life partner, it is obligatory for you to proceed with the marriage over the purchase of a house or a car. This is to prevent any immoral activities and to preserve the dignity of the individual. Islam encourages marriage to allow the fulfillment of mankind’s basic need to pro-create. It also helps in curbing social problems that would jeopardise the Muslim society.

• Protection of the Intellect or Mind (Al-Aql)Islam also regards the quest for knowledge as one of the top priorities for all Muslims. If one is to decide between the need to save for retirement or to save for his children’s education, the latter should prevail. Providing a good education to his children is more encouraged because education is the pillar to ensure success and a good life in this world and the hereafter.

The Prophet SAW once said, “Any one who wants this worldly life, he should have knowledge, and any one who wants the life of the hereafter, he should have knowledge, and who wants both this life and next hereafter, he should also have knowledge.” Furthermore when the prophet’s son-

Essentials (Daruriyyat)

Complementary (Hajiyyat)

Embellishment (Tahsiniyyat)

“A good Muslim is, therefore, required to have a proper balance

between the fulfillment of his spiritual and

worldly needs.”

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The Embellishment (Al-Tahsiniyyat)

The embellishment refers to interests which provide improvement in the society

– leading to a better life.

However, without these luxuries, the society will still function and the normal life process will not be interrupted. The examples in this category are: voluntary (sadaqah) and ethical as well as moral rules.

Conclusion

Maqasid Al-Shariah entails the commitment of individuals to achieve hayatan toyibah and al-falah by promoting brotherhood, justice and social welfare.

The concept focuses on fulfilling three levels of necessities – the essentials, complementary and embellishment. They are vital to ensure normal order in society as well as the survival of individuals.

In developing a holistic financial plan for a Muslim, the needs have to be analysed carefully to determine the suitability according to Shariah’s objectives.

Consideration has to be given in terms of preserving the five important values

– religion, life, lineage, intellect and property. Once these needs are met, the benefit to be received is not only during the lifetime but also for the hereafter.

The author is the principal consultant of RH Planners & Services, a personal financial planning services company. She is currently pursuing a PhD in Islamic Finance at the International Centre for Education in Islamic Finance (INCEIF).

in-law, Ali bin Abi Thalib compared the two dimensions of wealth, he said, “knowledge will take care of you while you protect your property.”

• Protection of Property (Al-Mal)Acquiring property is one of the necessities of mankind. It can be done through trade and investment. However, the acquisition has to be legitimate and does not contradict any Islamic laws. In order to ensure that the property is halal, one has to make sure that the transaction activity in generating wealth is in accordance with the Shariah principle. Prohibition of riba has to be observed at all times. Another way to protect the property is by taking a takaful scheme as a protective measure in case of theft or damage to property caused by fire or other calamities. Takaful can create an instant indemnity to the damaged property.

A Muslim can have a variety of needs at different life stages, but focusing on the needs that follow the objectives of Shariah is highly desirable. These needs not only give benefits during this lifetime but will also receive blessings from Allah SWT to live in the hereafter.

Upon completing the essential needs, man can now look at fulfilling his complementary as well as embellishment needs. Muslims are allowed to enjoy the fruits of their labour subject to moderation and compliance to the Shariah principle at all times.

The Complementary (Al-Hajjiyat)

In Islam, removing severity and hardship of individuals and community are considered as the aims of Shariah.

References

1. Al-Shatibi, Abu Ishaq (2003), Al-Muwafaqat fi Usul ash-Shariah, ed. Abdullah Diraz, Cairo: al-Maktabah al-Tawfiqiyyah.

2. Al-Alwani Taha Jabir (2001), Maqasid Al-Sahriah, 1 Ed. Beirut: IIIT and Dar al Hadi.

3. Azman Ismail (2005), Kuala Lumpur, Islamic Financial Planning (Module 1-6).

4. Dasuki, A W & Abozaid, A., A Critical Appraisal on the Challenges of Realising Maqasid Al Shariah in Islamic Banking and Finance, IIUM Journal of Economics and Management.

5. Ibn Ashur (1366 A. H.) Maqasid Al-Sahriah. Tunisia: Maktabat al-Istiqamah.

6. Ibn Ashur, Mohammad Al-Tahir (2006) (a) Ibn Ashur-Treatise on Maqasid Al-Shariah, trans. Mohamed El-Tahir El-Mesawi, Vol. 1, London-Washington: International Institute of Islamic Thought.

7. ___, (b) Maqasid Al-Shariah Al-Islamiyah, Ed. Mohamed El-Tahir El-Mesawi, Kuala Lumpur: Al-Fajr, 1999.

8. ___, (c) Usul Al-Nizam Al-Ijtimai Fil Islam, Ed. Mohamed El-Tahir Mesawi, Amman: Dar al-Nafais, 2001.

9. Kamali, M H (2009), Principles of Islamic Jurisprudence, Ilmiah Publishers, 2nd Revised Edition.

10. Laldin, M.A (2008), Introduction to Shariah & Islamic Jurisprudence, Kuala Lumpur, CERT Publications Sdn Bhd, 2nd Edition.

11. Nik Mohamad Affandi Nik Yusoff (2001), Islam and Wealth, Pelanduk Publications.

12. Rosly S.A (2005), USA, Critical Issues on Islamic Banking and Financial Markets, Authorhouse.

18 The 4E Journal

COVER STORY

January - March 2011

It was unprecedented – a bold, no-nonsense and ambitious initiative – to take the nation’s economy to the next

level of development. It was a project none has seen before in Malaysia – one with clear and measurable targets that are aimed at ensuring that the country achieves high-income status by the year 2020.

The brainchild of Prime Minister Datuk Seri Najib Razak, the Economic Transformation Programme (ETP) seeks to almost triple the country’s gross national income (GNI) from RM660 billion (US$188 billion) in 2009 to close to RM1.7 trillion (US$523

billion) in 2020. To achieve this, the country is expected to grow its GNI at 6 percent between 2011 and 2020 to hit the target.

And in line with its aspiration to bring about big results fast, 131 entry point projects (EPPs) and 60 business opportunities spread across 12 National Key Economic Areas (NKEAs) have been identified in the 10th Malaysia Plan – Oil, Gas & Energy, Palm Oil, Financial Services, Tourism, Business Services, Electrical & Electronics, Wholesale & Retail, Education, Healthcare, Communications Content & Infrastructure, Agriculture and Greater

Kuala Lumpur. Of the 12 NKEAs, 11 are industry sectors and one – Greater Kuala Lumpur – is a geographical location.

An NKEA is a driver of economic activity that has the potential to directly and materially contribute to a quantifiable amount of economic growth.

The ETP is also forecasted to create an incremental 3.3 million jobs, of which 63 percent will be in the middle- and high-income segments compared with the current 43 percent. The overall effect will be a significant growth in the job market,

&High-IncomeTowards

Sustainability

18 The 4E Journal

The 4E Journal 19

The Economic Transformation Programme (ETP) is, by far, Malaysia’s most ambitious economic programme. How is the ETP fundamentally different from say the New Economic Model and all the previous Malaysia Plans?

The ETP is a programme, not a plan. This simply means it has specified projects, targets, projection owners, timelines and action items. It is action-oriented and anchored on key performance indicators (KPIs) namely income and job generation.

On the other hand, plans tend to be strategic in nature and provide blueprint, which generally do not have precise roadmaps. The ETP is different in that it also prescribes a clear focus on 12 National Key Economic Areas (NKEAs) that the country is most competitive in and will channel disproportionate amount of financial and human capital as well as attention from the government.

This focus is validated by the forecast that 73 percent of the country’s gross national income (GNI) in 2020 will come from 11 NKEAs (excluding Greater Kuala Lumpur/Klang Valley due to potential income duplication). The implementation of the

131 entry point projects (EPPs) under the ETP will be closely monitored. They will also receive the necessary administrative facilitation and fiscal support to ensure optimal delivery.

What were the key findings that have come out from the various labs that have helped set the focus on achieving the various goals of the ETP?

In our aspiration to transition from middle-income to high-income, we must be focused and think out of the box. The need to really focus came with the realisation that we cannot excel in every economic sector, either due to loss of cost advantages or lack of competitiveness.

This is the reason why the 1,000-person workshop comprising participants from both the private and public sectors recommended that the country only focuses on the 12 NKEAs. After the focus on the 12 NKEAs was determined, the NKEAs labs of more than 500 members from the private and public sectors were set a few goals: take the per capita GNI from US$6,700 to US$15,000 by 2020, identify the projects to do so and create higher paying jobs in the process.

a shift towards higher paid jobs and a strengthening of skills base.

“Malaysia has no time to lose,” said Senator Datuk Seri Idris Jala, Minister in the Prime Minister’s Department and chief executive officer of PEMANDU (Performance Management and Delivery Unit). “We need a complete, radical economic transformation. The days of depending on traditional growth engines are over. If we continue on the current economic model, we risk getting stuck in middle-income trap and continue to lose out on talent necessary to support a high-income economy.”

“The ETP is essentially the economic roadmap for Malaysia, one that is co-created by the private sector and the government. It marks a fundamental departure in the approach towards economic planning in order to achieve developed nation status in 2020. It is also action-oriented and performance-focused, with well-developed and specific deliverables to grow each NKEA. It is the way forward,” Idris said matter-of-factly.

And this is where more transformational opportunities lie. The way forward also means creating a financially literate society in order that the wealth acquired may be duly and appropriately preserved for the long-term. As such, the government’s strategic intent of driving Malaysia towards becoming a high-income nation has to be delicately balanced with increasing financial literacy amongst the Rakyat to ensure sustainability. Both objectives must be given equal weightage and attention. The ETP has specifically addressed this need as well. With high-income comes the need for the populace to make better-informed financial choices and discipline in their personal finance. An increase in income clearly does not auger well if there is a corresponding increase in bankruptcies as both are not mutually exclusive. Unquestionably, financial literacy is critical to our prosperity as individuals as well as a nation.

To be better acquainted with the ETP, and specifically to find out more about the initiatives that the financial services NKEA has mapped out, the 4E Journal managing editor Steven K C Poh emailed Idris a list of questions, which he graciously and incisively answered. Plans are underway to integrate financial literacy into the Malaysian school curriculum and opportunities abound for financial planners to make their impact in the financial life of their clients. Check out the interview. The following are excerpts ….

Oil, Gas & Energy

Financial Services

Business Services

Wholesale & Retail

Healthcare

Content& Infrastructure

Palm Oil

Tourism

Electrical& Electronics

Education

Communications

GreaterKuala Lumpur

The 12 National Key Economic Areasof the Economic Transformation Programme

20 The 4E Journal

These targets are not easy to achieve but they are deliberately set high to force lab members out of their comfort zone and think out of the box. The message is that incremental improvement is not sufficient. Business as usual can no longer be the way forward. The result was an innovative, action-oriented way of doing things. The lab members not only told the government where to go but also who, how, when and what it takes to get there. The 131 EPPs identified clearly state the where, who, how, when and what to achieve the ambitious high-income nation targets.

How are efforts to realise the 12 NKEAs progressing so far? Can you share with us some of the early wins and what can be expected to be realised in 2011?

Since our launch on October 25, 2010, we have made good progress in all the 12 NKEAs. We have had four rounds of progress updates, where the Prime Minister announced new projects under the ETP. To date, we have announced 60 projects within 46 EPPs, which means 35 percent of the EPPs have taken off.

These projects have secured over RM95

billion in committed investments from a mix of domestic and multinational companies, a GNI impact of over RM137 billion, and will create 224,358 jobs by 2020. We have recently concluded the base load investment exercise where we contacted 5,835 companies in Malaysia, asking for projected investment in 2011.

Over 30 percent responded and we have also determined that private companies in Malaysia over the course of this year will invest RM50.6 billion. Coupled with the RM76 billion we expect to be invested through the EPPs, the best case scenario would be for a total investment of over RM127 billion in 2011. This gives us the confidence that the investment target of RM76 billion set for this year is achievable.

What are some of the key challenges PEMANDU, and in particular, the ETP, has faced in the last few months in terms of initiating change in the massive government machinery and what is currently being done to address the civil service mindset considering that it is an important, if not integral component of the transformation process (i.e. ensuring that the ETP is successfully implemented and achieve the desired results)?

For the ETP to succeed, implementation is key. We have always been long on planning but short on implementation. Not only must we set in motion the momentum to achieve our end target in 2020, we must also get big results fast to inspire confidence.

PEMANDU cannot do this on its own. We must form a winning coalition with the entire civil service to create an unstoppable movement that will not only generate results but also transform processes and culture. To do this, we must hold fast to the rigour of Discipline of Action.

Every project has an owner who will be held responsible for ensuring outcomes. PEMANDU’s role as a facilitator means ensuring collaboration and leverage both vertically and horizontally across the civil service.

At our monthly Steering Committee meetings chaired by the respective lead ministers, all relevant agencies, ministries and private sector project owners are present, to ensure action are agreed on and problems judiciously resolved. In this manner, we will ensure transparency and accountability and continued discipline of action will create a new culture of result-oriented performance.

From a national financial planning perspective, some quarters think a systemic change is required to efficiently manage the government’s revenue and expenditure in order that the objective to make Malaysia a high-income nation (a per capita income of US$15,000) by 2020 is achieved. Is this being addressed? How so and in what way?

The ETP is about systemic change in several ways. The unsustainable dependence on oil and gas as a gross domestic product

“In our aspiration to transition from middle-income to high-income,

we must be focused and think out of the box. “

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(GDP) contributor has to be moderated from 22 percent to 14 percent in 2020. The services sector will reach 63 percent of the GDP, in line with the characteristics of developed economies, supporting contribution from commodities and manufacturing, among others. The economy can no longer rely on the government as the engine of growth. This task has to be returned to its rightful owner – the private sector.

The government will play the role of a facilitator. This way, the country’s fiscal position can be strengthened to ensure we are better positioned to deal with unexpected external global vagaries. The ETP, with its focus and precise implementation roadmap, provides the way to achieve all these goals.

How does the ETP complement or dovetail into the Government Transformation Programme (GTP)? Or

are the ETP and GTP mutually exclusive in their respective objectives?

The ETP and GTP are complementary programmes. The ETP focuses on increasing the wealth of the country by raising the GNI per capita and increasing wages, in an inclusive and sustainable way.

The GTP focuses on the social aspects of transformation, ensuring the distribution of wealth and increasing the quality of life for the Rakyat, especially for the bottom 40 percent that require assistance. Income generated from the ETP will be spent on the GTP. For example, revenue earned from increased tax arising from heightened profitability will be channeled and spent

on improving rural basic infrastructure, helping low-income households and improving education outcomes.

In this regard, education is especially key. Resources will be invested to ensure the bottom 40 percent received quality education that will help their children exit the vicious poverty cycle. Equipped with better skills, they will become more employable and create a pipeline of skilled workforce required by a higher income economy.

Some analysts have postulated that a high-income economy will also lead to high cost of living, which may basically mean that in the end we may not have a tenable quality of life. How is this issue mitigated and addressed in the ETP?

Malaysia is stuck in what we term the ‘middle-income trap.’ To meet our target of becoming a high-income nation by 2020, we must ensure that real wages go up. This means increasing wages faster than inflation. We can see this effect in a recent survey by Robert Walters, an international recruiting agency. Their findings predicted a rise of up to 30 percent in professional salaries. If we can keep this up through to 2020, we can ensure that the cost of living will be proportionally lower than what it is today.

In the nation’s quest to achieve a high-income status by the year 2020, where do you see the bottom 40 percent of the population in terms of their economic standing? There are concerns from various quarters that instead of bridging the income gap it may actually widen it. Your comment please.

Based on the lab analysis, it is expected that more jobs will be created in the upper income level and this will shift the bottom 40 percent of the population into a better income bracket.

“NGOs can greatly assist them by working hand in hand to address common misconceptions and provide the public with the required fundamental knowledge in financial planning. “

“Human capital is a very critical enabler in the financial services sector and to meet short-term demands for talent. “

22 The 4E Journal

The financial services sector has been positioned in the ETP as the bedrock of our high-income economy aspirations. Why financial services and not one of the other 11 NKEAs, say oil, gas & energy or perhaps Greater KL?

The financial services sector forms the bedrock of any economy. This is largely due to the fact that in any project, in this case, EPPs and business opportunities (BOs), would require capital for development and operations. All large successful economies require strong banks, vibrant capital markets and well-functioning financial infrastructure, which is the focus of this particular NKEA.

It is important that our financial services sector be sound and is ready to support the expected growth in the economy. Apart from being an industry on its own, growth in other sectors will need access to the capital market which will provide the required capital, be it from the bond market or the equity market.

Malaysia’s young wealth management industry is currently focused only on the affluent market. What will the government do, via the ETP, to ensure that the ‘wealth’ (whatever each citizen has) of the average Rakyat is effectively and efficiently managed to ensure long-term sustainability?

As mentioned earlier, the ETP aims to raise the GNI per capita to US$15, 000 per annum from the current US$7,600. Over the next 10 years, we will create significant wealth, and it is our intention that it is in a manner that would be sustainable for a long period of time.

This goes hand in hand with increased financial literacy. EPP 7, which addresses wealth management, intends to carefully liberalise and increase the number of wealth management products available to the general public, slowly introducing the concept of wealth management to the Rakyat at all income levels. To ensure the success of this EPP, the government will work with the private sector to bring in and nurture wealth managers and product specialists who are best able to cater not just to the affluent few, but to the general public as well.

One of the challenges of the Malaysian financial services sector is the low levels of financial literacy. What is the government doing to ensure that the Rakyat better manage their personal finances in line with its move to a high-income economy? Also will the government be proposing a tax

incentive for the citizenry to engage in financial and retirement planning? If so, when will this happen? Surely if tax incentives can be given to foreign companies to invest in Malaysia, they can be given to the Rakyat to be actively engaged in financial and retirement planning to significantly lessen the government’s financial burden in the provision of social welfare services.

Malaysia’s tax base is relatively narrow with approximately one million taxpayers, making a tax incentive scheme unfeasible. The Ministry of Finance is currently studying ways to increase this tax base to create avenues for the government to provide incentives for the Rakyat to undertake financial and retirement planning.

We realise that while economic growth is fueled by consumer spending and the

availability of credit enables consumers to spend more in the market, it is crucial that the Malaysian public is provided with at least a basic understanding of financial literacy to manage their personal finance. To this end, organisations such as Bank Negara Malaysia, the Securities Commission and Bursa Malaysia have begun initiatives to educate the public on this matter.

Specifically, what can a non-governmental organisation (NGO) like the Financial Planning Association of Malaysia (FPAM) do to assist the

“The financial services sector forms the bedrock of any economy.“

The 4E Journal 23

government (i.e. align its activities) in creating and reinforcing greater financial literacy amongst the Rakyat?

Basic financial literacy should be a basic right of all citizens. While institutions such as Bank Negara Malaysia, the Securities Commission and Bursa Malaysia have already begun initiatives to educate the public, NGOs can greatly assist them by working hand in hand to address common misconceptions and provide the public with the required fundamental knowledge.

By undertaking corporate social responsibility (CSR) programmes to educate the Rakyat on financial literacy, NGOs can build on the advantage of being in close contact with financial planners and turning around new information in a timely manner.

What exactly is the National Financial Literacy Programme (NFLP) as propounded in the ETP? What kind of resources has been put into this and when will it be rolled out? In addition to MAAM, LIAM, PIAM and MII, will

other related NGOs be roped into this initiative or is the current member composition final?

The NFLP was identified as a common enabler for the financial services industry. The central bank will take the lead on the roll out of this programme and the lab’s proposal would be used as an input by Bank Negara Malaysia in their Financial Market Masterplan which would be released this year.

Does the financial services NKEA have any plans to promote financial planning through our national school system? If so, how will this be done?

Yes, we do. A cornerstone of the programme will be the integration of financial literacy into the formal school curriculum. The regulators involved are looking at a more voluntary approach and working discussions with the Ministry of Education would need to be done to ensure that the alignment of financial literacy with the nation’s academic curriculum would not have an adverse effect on the quality of teaching.

Also, in view of the Employees Provident Fund (EPF) being the custodian of the retirement fund of its contributors, what is the EPF’s role in promoting financial and retirement planning to

the Rakyat? Is the ETP engaging EPF to assist in this critical initiative?

EPF is mandated by the Act to be the manager of provident funds, and over the years it has provided good returns to its contributors/members due to its effective investment strategies. In a way, the Act actually made it compulsory for the employees and employers to contribute towards their retirement savings and allow full withdrawal of their EPF funds on their retirement. EPF have been central in the discussion and engagement on EPPs 5, 6, 7 and 8 (see accompanying table) and it is supporting the EPPs within the scope and mandate that have been provided by the Act.

“Basic financial literacy should be a basic right of

all citizens. “

Entry Point Projects No. 5 - 8

Insuring most, if not all, of our population.

Accelerating the growth of the private pension industry.

Spurring the growth of the nascent wealth management industry.

Accelerating and sustaining asigni�cant asset management industry.

EPP 5

EPP 6

EPP 7

EPP 8

There is a proposal in the ETP to review and perhaps raise Malaysia’s archaic statutory retirement age. How is this coming along and when will its details be finalised?

This is a very real issue, and has been brought up during our engagements with EPF. At this point of time, the matter is still being deliberated by the respective parties and detailed analysis would need to be done to assess the impact of this proposal to the economy and social environment.

To ensure that financial and retirement planning are effectively implemented, qualified human capital will be needed.

What is the government doing through the ETP’s financial services EPP to ensure that this is done?

Human capital is a very critical enabler in the financial services sector and to meet short-term demands for talent, organisations such as the Talent Corporation have been established with the aim of matching the appropriate skill sets with demand. This will involve recruiting both Malaysians abroad and expatriates. We are also working with other NKEAs, for example, education, to ensure appropriate talent is nurtured and kept within the country.

• •

The 4E Journal 25

INDUSTRYJanuary - March 2011

Three Questions to Help Your Clients Shift Their Retirement Funding Capacity into Overdrive!

By Rajen Devadason, CFP®

If we help our clients live better lives in both the present and the future, our own lives will be greatly enriched. Often,

doing so requires extra attention to the details of our clients’ past behaviour, at least as it concerns their economic well-being.

Near the end of this article, I will outline three compound questions you might be able to ask your clients to help them personally shift into overdrive their personal retirement funding capacities. As you do so, you will probably find that you will begin thinking of ways to accelerate the creation of your own nest egg.

If done correctly, these twin benefits can be mutually beneficial to clients as well as to their financial planners, unit trust consultants or insurance agents.

Most Malaysian adults need help in this regard because whether they are in their early 20s or late 50s or somewhere

in between, it is very likely they have spent far more time planning the details of a long weekend holiday than they have their own eventual retirement! This isn’t a Malaysian phenomenon. Adults in all countries are the same. Our predisposition toward procrastination and our inability to correctly distinguish between the merely urgent and the truly important are mainstays of human nature.

Yet, if judicious guidance could be extended to our clients – from us, hopefully

– to manage their finances better and to invest for the long-term, then we would be playing a role in turning the tide away from frivolous short-term speculation toward serious long-term investing with the aim of helping people sufficiently fund their retirement nest eggs.

John C. Bogle, the founder and ex-CEO of the Vanguard Group, recently wrote a book entitled Enough. I recommend you buy a copy for yourself and study it

at length; doing so will give you a fresh appreciation for the importance of the highest standard placed upon all those of us who are Certified Financial Planners (CFPs) or those who aspire to one day join our ranks:

Always Put Our Clients’ Interests First

That is a high and noble ideal, which is tough to adhere to all the time. But then ours is a high and noble profession, which aims to help others before we help ourselves. If you need a refresher, download for yourself the current FPAM Code of Ethics from: www.fpam.org.my/fpam/wp-content/uploads/2008/12/Code-of-Ethics-2010.pdf

(I suggest you focus on better understanding and increasingly applying the 8 core principles of Client First, Integrity, Objectivity, Fairness, Professionalism, Competence, Confidentiality and Diligence.)

• •

“If we help our clients live better lives in both

the present and the future, our own lives will

be greatly enriched.”

26 The 4E Journal

The first step is equipping ourselves through both formal and informal study; therefore, let me give you a taste of what Bogle writes in his outstanding book:

“Which is the winner’s game and which is the loser’s game? Betting on real numbers and real returns, and buying and holding stocks for the long haul? (That is, investing.) Or betting on expected numbers and ginned-up returns, and in essence renting stocks rather than owning them? (That is, speculating.) If you understand how the odds in gambling diminish your chances of winning – whether in the lottery, in Las Vegas, at the racetrack, or on Wall Street – your decision as to whether to be a speculator or an investor isn’t even a close one.”

Bottomline: If we are to be of true long-term use to our clients, then we need to steer them away from speculative tendencies toward investment ‘friendly’ activities. A great way to start would be to teach our clients that two distinct goals need to be set and eventually integrated into all financial planning related decisions:

1. To have sufficient money to outlast their expected lifespans.

2. To retain (or possibly regain) a sense of control over their lives.

Having Sufficient Money

Most working Malaysians have forced savings that flow into their Employees Provident Fund (EPF) accounts each month. Unfortunately, two different studies carried out by EPF suggest the average Malaysian receiving his or her EPF payout at the age of 55 will see that money dwindle to nothing within three to five years.

Very few Malaysian retirees will die between the ages of 58 and 60, which is good! But the downside to living to a

ripe old age is that in an environment where quantitative easing is becoming the solution of choice for central bankers, inflation, particularly in the key areas of food and fuel, will continue to be a major problem for all of us hurtling toward an eventual 21st Century retirement.

At the moment, the average Malaysian reaching 55 is expected to live until he is 79 or she is 83. Now, since women tend to live longer than men, this tendency should be accounted for in the retirement planning calculations financial planners crunch for their clients. You see, since most men marry women who are younger than they are, it is vital for responsible male primary breadwinners to ensure sufficient funding exists for their eventual widows.

EPF helps millions of Malaysians live with a modicum of self-respect in their old age. But, as mentioned, by itself EPF is not enough for most people’s full retirement funding needs.

Obviously, much more money needs to be channelled and split between savings

instruments like bank savings accounts, fixed deposit accounts, money market funds and – for those who qualify for it – ASB (Amanah Saham Bumiputera) accounts, and investment vehicles like bond funds, equity unit trust funds, real estate investment trust (REIT) funds, direct stocks and rental properties.

In my financial planning practice, I urge my most proactive clients to aim to eventually attain a net savings and investment rate (after EPF, SOCSO and tax deductions) of 50 percent. When I share this strategy with potential clients, it becomes easy for me to identify those I will work best … and worst with.

Those who start arguing, saying such a high savings rate is unreasonable, are unlikely to succeed financially. As a matter of course, I politely decline their business. Those who look inspired by my unconventional advice and who are willing to embark upon a decade-long journey of gradually raising their savings and investment rates are often the ones who turn out the best.

The average Malaysian reaching 55 is expected to live until he is 79 or she is 83.

“Our predisposition toward procrastination and our inability to correctly distinguish between the merely urgent and the truly important are mainstays of human nature.”

The 4E Journal 27

to educate your client on what exactly a cash flow statement is! If it will help, you are welcome to read for yourself or point your client to my article What is a Cash Flow Statement at www.freecoolarticles.com/FP14.htm

The acknowledged drop in the education standards of both Malaysian public schools and public universities over the last three or four decades has placed an additional stumbling block in the path of ambitious Malaysians who are eager to take on the world. But that stumbling block is not impossible to overcome.

A commitment to lifelong learning and an unwavering resolve to improve vital language skills – most notably in English and in some cases Mandarin – need to be present in those who dream big and who hunt after the best life has to offer worldwide.

If you are able to boldly present each of those three questions to your clients and then commit to work with them over a number of years to help them improve, you will find that by placing your clients’ interests first your own personal book of business will, unavoidably, grow bigger as your clients choose larger, ever larger, retirement funding solutions.

The author is a Securities Commission-licensed financial planner with MAAKL Mutual Bhd. He is also CEO of corporate mentoring consultancy RD WealthCreation Sdn Bhd, and is a professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be contacted at rajen@RajenDevadason.com

Retaining or Regaining Control

When it comes to finding additional money to boost a personal retirement fund, our options are limited only by our imagination. Here are three areas to consider:

1. Rescue funds wasted on credit card interest;

2. Save and invest for the long haul; and3. Focus on becoming more valuable in

your job market or business arena.

Pose these questions to your clients (and, if necessary, to yourself ):

1. If you don’t pay off your credit card bills in full each month, is it because you are consciously overspending each month or because you don’t realise how much money you’re wasting?

2. If you are not actively working to save and invest more over the coming years, is it because you expect a last minute windfall or because it never occurred to you it is possible to save and invest more and more each year through careful control and monitoring of your cash flow statement?

3. If you are not on track for a promotion at work or expansion of your business is it because you have stopped working and studying hard at becoming a world class expert in your field?

Once you help a client construct an accurate net worth statement, you may use it to zero-in on issues pertaining to questions 1 and 2. In both situations, the remedy is found in strengthening the cash flow statement. The best way to do so is

“If we are to be of true long-term use to our clients, then we need to steer them away from speculative tendencies toward investment ‘friendly’ activities.”

28 The 4E Journal

ECONOMY

January - March 2011

The Tunisian Effect: Hike in Oil Price RevisitedBy Anthony Dass

The recent Tunisian Effect has, without a shadow of doubt, accelerated significant unrest in the Middle East and North Africa, and in the process caused oil prices to surge upwards. While oil prices may have retraced slightly, volatility remains high. Of concern are Iran and Saudi Arabia, with Iran able to raise oil prices by 5.9 percent to 10 percent should it cease output and Saudi Arabia by 25 percent to 42 percent. In the process, will there be a re-run of 2008 inflation versus deflation.

While inflation remains the key issue for developing Asia, the hunt for yields and the focus on rebalancing in the long run continue, the risk of deflation is high for Europe and Japan and stagflation is a concern in the U.S. The risk of double-dip in 2011 remains low as we believe the crisis is temporary – world economy has righted itself amid optimism that macro issues have started to turnaround. That’s not all. Rising commodity prices in the past month also did not cause global growth to lose steam. And while developing Asia is expected to experience more headwind than derailment, Malaysia will benefit from these first round effects.

Unrest in Iran and Saudi Arabia will ramp up oil prices

We have aptly defined the current Middle East and North African protest as the ‘Tunisian Effect.’ Started in Tunisia, it resulted to a revolution never seen before in Egypt and Libya with major protests also ‘erupting’ in Algeria, Bahrain, Iran, Iraq, Jordan, Oman and Yemen. Minor incidents flared up in Kuwait, Saudi Arabia and Syria. The factors that triggered the protest include: (1) government corruption, (2) dictatorship, (3) human rights violation, (4) unemployment, (5) poverty and (6) large percentage of youth population.

Current rising oil price trend suggests that the Middle East unrest will not be resolved in the near term. Brent crude oil price rose by 26.9 percent to US$116.02 per barrel between December 17, 2010 and March 1, 2011, while West Texas Intermediate (WTI) gained by 13.2 percent to US$99.63 per barrel and Dubai Spot rose by 18.1 percent to US$106.37 per barrel.

Although oil prices may have retraced slightly, we expect volatility to remain high. Apart from Libya, Iran is also facing strong civil unrest and the situation is worrying. Saudi Arabia is also of concern, although it has managed to contain the minor protest.

We concur with consensus that a total disruption of oil output by Libya that amounts to 1.585 million barrels per day (mbpd) or the equivalent of about 2 percent of world output can be compensated by the Organisation of the Petroleum Exporting Countries (OPEC) which is sitting on a spare capacity of 5.15 mbpd. Adding on, Saudi Arabia alone can offset Libya’s total shortfall with a spare capacity of 3.1 mbpd.

If Algeria falls into unrest, we believe they would not follow Libya’s chaotic trajectory. Algeria went through a prolonged period of civil unrest in the 1990s when the government and Islamists fought each

Table 1: The Middle East and North African Unrest

Countries

TunisiaAlegeriaLibyaJordanOmanYemenSaudi Arabia

Protest Began

Dec 18, 2010Dec 28, 2010Jan 13, 2011Jan 14, 2011Jan 17, 2011Jan 18, 2011Jan 21, 2011

Countries

EgyptSyriaIraqBahrainIranKuwait

Protest Began

Jan 25, 2011Jan 26, 2011Feb 10, 2011Feb 14, 2011Feb 14, 2011Feb 14, 2011

Chart 1: WTI (US$ per barrel) Graph 2: Brent (US$ per barrel)

The 4E Journal 29

other, but did not cease oil production. Producing about 1.25 mbpd or about 1.7 percent of world production, its total shortfall can be easily compensated by OPEC and in particular Saudi Arabia. Saudi Arabia’s output is 5.3x higher than Libya’s 1.585 mbpd output in January 2011 and 6.7x more than Algeria’s January 2011 output of 1.25 mbpd. Saudi Arabia can compensate the combined output of 2.835 mbpd alone as it has a spare capacity of 3.1 mbpd in addition to OPEC’s spare capacity of 5.15 mbpd.

In our view, the current rising oil price is more than just a Libyan or Algerian factor, given that these two countries’ disruption can be well compensated by OPEC and Saudi Arabia. Thus, we believe any upward pressure to oil price will come from Iran, the second largest oil producer in OPEC, producing 3.75 mbpd with a spare capacity of 4 mbpd. If unrest flares up, the ultimate outcome will be a transition government or armed conflict. Any of these outcomes could lead to a drop in oil output. Iran alone can influence oil price by 5.9 percent to 10 percent should there be any disruption in oil supply.

Although Saudi Arabia was able to nip its minor civil unrest in the bud in January 2011 and may have contained somewhat with increasing expenditure to address the key economic issues, we remain cautious. Apart from the divided Sunnis and the minority Shiites, Saudi Arabia shares common denomination with crisis-hit countries like Tunisia, Egypt, Libya, Bahrain and Oman – high unemployment, economic deprivation and political frustration. Our own analysis shows that

Saudi Arabia can spike up oil price by 25 percent to 42 percent should there be any disruption in supply.

Will there be a re-run of the 2008 inflation versus deflation risk?

We believe the stronger and longer surge in commodity prices would alleviate deflation risk, which means a repeat of what happened in 2008. While rising oil prices would ultimately raise cost-push inflation and hurt these economies which are still mired in a balance sheet recession, spending would be diverted into highly visible areas with inflation appearance like gas prices and create deflationary scenario in the least visible areas.

Also, an oil spike could have a preserve effect of short circuiting inflation that is hitting hard in Asia. Driven by excess money growth, strong economic performance and increasing capacity constraint, higher commodity and energy cost would contribute to upward pressure on both wages and inflation. Such pressure could have a preserve effect of short circuiting inflation as evident in 2008, implying that rising inflation would not spiral out of control. We expect policymakers to get behind the curve by raising interest rate and allowing the exchange rate to appreciate if need be. Also, the rising oil and food prices would put a lid on economic optimism as they erode household disposable income, unless income grows much faster to offset price increases.

Investors’ angst coupled with the policy mix of large fiscal deficits and highly

stimulating monetary policies are also seen as inflation drivers. We believe inflation will remain benign due to lack of excess monetary growth, weak pass-through effects from higher commodity prices due to the ongoing slack in the economy and structural capacity issues.

Increasing prevalence of adverse supply shocks and low interest rates could also force headline inflation volatility to seep into core prices as inflation expectation gets entrenched. This could heighten stagflation risk, which is a dangerous cocktail, especially if growth is kept at bay from the effects of balance sheet recession resulting in deleveraging. Stagflation risk is, in our view, not global per se, but confined to certain economies, which is semantic and matters. Such risk is more eminent for the U.S., while deflation risk is more confined to Europe and Japan.

For now, we are leaning towards a re-run of what happened in 2008. We fear developing Asia may not be able to withstand the huge short-term capital inflow without letting food prices get out of control. Rising food prices will result in political instability and force investors to withdraw. The issue for developing Asia is, in our view, will be to address inflation as the hunt for yields continues and focusing on rebalancing in the long-term. Meanwhile, we fear the risk of deflation accelerating in Europe and Japan where it never left, while stagflation could worsen in the U.S.

1.402.050.504.002.502.651.792.500.90

11.502.652.40

34.8432.34

AlgeriaAngolaEcuadorIranIraqKuwaitLibyaNigeriaQatarSaudia ArabiaUAQVenezuelaOPEC-12OPEC-11*

1.251.640.473.722.552.321.592.100.828.402.352.21

29.3926.85

Space Capacity(mbdp)

January 2011Capacity (mbdp)

*Excludes Iraq

Table 2: OPEC Spare Capacity & Oil Output (mbpd)

30 The 4E Journal

Risk of Double-dip!

Current rising trend of crude oil prices due to the upheaval in Middle East and North Africa have raised eyebrows and rekindled the feelings of 2008. Is the risk of double-dip there? We have played down the double-dip risk at the moment for 2011 on the assumption that the crisis will be temporary and will not have severe impact. We believe the world economy has righted itself amid optimism that macro issues have started to turnaround. And right on cue, we found rising commodity prices that include crude oil in the past month did not cause global growth to lose steam. Thus, we reiterate our 4.3 percent global growth for 2011 from 4.8 percent in 2010.

Even prior to the unrest in the Middle East and North Africa, we have already raised our 2011 crude oil projection from US$95 per barrel to US$105 per barrel, from US$80 per barrel in 2010. Lending support to our upward adjustment to crude oil price are: (1) fear that U.S. Quantitative Easing 2 (QE2) of US$600 billion will dilute the value of U.S. Dollar, (2) improving economic outlook from developing Asia, (3) supply constraint, and (4) some levels of geo-political risk.

But global growth could be curbed if oil prices stay stubbornly higher than our US$105 per barrel average. Should oil prices surpass our 2011 US$105 per barrel average and are sustained above our average for a significant period (for instance, close to one year), we foresee a significant impact on gross domestic product (GDP). Even so, it would not be sufficient enough to derail global growth. We have found that for every US$10 a barrel hike in oil price, global growth would drop by 0.5 percent.

Headwind compared to derailment in developing Asia

From the perspective of developing Asia, rising oil prices would be more of a headwind than a derailment to its growth.

While higher oil price would steal some share of developing Asia’s wallet, it remains inadequate to offset the internal growth driven by strong consumer demand and a booming expansion, particularly with strong growth in China and India.

But that does not mean that developing Asia’s growth has decoupled from oil price movements? While the high oil price would reduce demand and raise production costs, its impact would be less significant, especially to economies enjoying fuel subsidy, as it will ease pressure on manufacturing, transportation and consumer costs. Should oil price stay stubbornly high for a prolonged period, it will dent the authorities’ ability to continue subsidising, thus resulting to some unwelcome level of drag. Any impact will vary according to the economic characteristics of each of these countries.

Malaysia to benefit from the First Round Effect

The Malaysian economy would enjoy a positive first round effect and a negative second round effect thus lowering growth by 0.4 percent: The first round effect from higher oil price will be positive, raising real GDP by 0.4 percent for every US$10 per barrel average increase in price via positive terms-of-trade that would increase net income. But the second round impact on the economy would be negative, slashing growth by 0.8 percent, pulled down by weaker external demand with much depending on domestic demand. Hence, the net effect on growth will be a contraction of 0.4 percent. We maintain 2011’s real GDP of 5.3 percent from 7.2 percent in 2010

Nonetheless, we expect the central bank to raise its overnight policy rate (OPR) by 50 basis points (bps) to 75 bps from 2.75 percent now to:

• contain the real returns gap that will erode purchasing power if inflation continue to rise.

• avoid a net capital outflow that will weaken the Ringgit and raise import cost especially food which Malaysia is a net importer. Possibility for the statutory reserve requirement (SRR) to be raised also remains high, expecting 100 bps to 150 bps from the current 1.0 percent.

While risk of doing business alleviates, domestic firms should strive to be more innovative. Underpinned by rising inflation, slower economic growth and

Table 3: Impact of Oil Price Change (US$10 per barrel)

-0.5+0.5

-0.5+0.6

Real GDP (y/y percent)In�ation (y/y percent)

WorldEconomy

Year1 2

January 2011Capacity (mbdp)

Table 4: Impact of Crude Oil Price Change (US$10 per barrel)

-0.8-1.0-0.4-1.6-1.8-0.2

ChinaIndiaMalaysiaPhilippinesThailandIndonesia

+0.8+2.6+1.0+1.6+0.8

2.0

-0.6-1.20.0

-2.0-3.0-0.8

DevelopingAsia GDP In�ation

Trade Balance(Percentage of GDP)

Meanwhile, high commodity prices would also exert pressure on inflation through direct and secondary effects. The direct impact from rising inflation would be that it would dampen domestic demand and erode real disposable income. The secondary effect would be through transfer pricing. We found for every US$10 per barrel average increase in oil price, inflation will increase by 1.0 percent. As such, we are revising our inflation forecast from 2.5 percent to 2.8 percent for 2011 from 1.7 percent in 2010.

The effectiveness of a monetary policy to nip inflation in the bud would also depend on whether cost-push inflation outweighs demand-pull inflation or otherwise. Should cost push inflation be the main culprit, the effectiveness of a monetary policy would be limited, in our view, as it could raise debt-servicing defaults while dampening profits for corporations. However, if Bank Negara Malaysia prolongs the rate hike, fear of falling behind the curve will accelerate and more stringent measures that may not augur well for the economy could be unveiled.

The 4E Journal 31

risk of a weaker Ringgit, the risk of doing business is clearly heightened. Foreign investors with Ringgit-denominated assets would fear the value of Ringgit depreciating and hence liquidate Ringgit-denominated asset holdings. Local investors, on the contrary, would be vulnerable to domestic interest rate hikes and thus raise the risk of defaults. But local firms would also be forced to become more competitive and innovative to generate income in order to protect their margins, especially with the economy still behind the curve in areas like adopting freer trade, property rights and economic freedom.

Meanwhile, the policymakers’ objective to improve the overall fiscal sustainability by reducing subsidies and budget deficit could also be derailed. While rising crude oil price would certainly improve revenue, it would, on the other hand, raise the cost of subsidies, thus undermining fiscal sustainability.

We found that for every US$10 per barrel increase in crude oil price, government revenue would be raised by RM4.5 billion and subsidies by approximately RM1.3 billion. Looking at Budget 2011, 6.3 percent of the total operating expenditure has been allocated for subsidising liquified petroleum gas (LPG), diesel and petrol which amounts to RM10.3 billion and this translates into US$85 per barrel.

Should oil price average at US$105 per barrel, we expect subsidies alone to hit RM13.7 billion. Drastic cuts in spending and subsidies may not augur well for the economy, but failure to reduce spending could significantly heighten economic risk.

Sectors that would potentially benefit from this Rising crude palm oil (CPO) prices following stronger crude oil as well as RM/U.S. Dollar places the plantation sector as the outright winner. CPO and crude oil prices tend to exhibit a strong positive correlation of 0.65x, implying the current rising trend of crude oil prices would alleviate CPO prices.

We found that for every US$10 per barrel increase in crude oil prices, CPO price would increase by US$5.18/metric tonne. Underpinned by the positive relationship between crude oil and CPO prices and further amplified by the fact that the concomitantly weaker U.S. Dollar would reduce the cost of fertilisers, the plantation sector, as mentioned earlier, appears to be the outright winner.

Oil and gas (O&G) companies would also be direct beneficiaries from the rising crude oil prices. The uptrend in crude oil prices would encourage more upstream activities by the oil majors. At the same time, we expect the benefits to cascade down to the entire O&G value chains. Also, consolidation of domestic oil field services sector and efforts to attract global oil field services players into Malaysia would help raise the level of competencies and competitiveness of the local O&G companies and turn Malaysia into a regional hub for oil field services.

Even so, oil usage in the power sector is low. Focusing on just Tenaga Nasional Bhd and the independent power producers (IPPs), the total fuel cost accounts for about 65 percent of the total operating cost.

However, oil usage is less than 1 percent of the power generation. The bigger concern for the sector, therefore, would be coal and gas prices. While gas does not correlate strongly with oil, interestingly we found coal prices to be highly correlated with oil price.

For every 10 percent gain in crude oil price, coal prices would increase by 9 percent. Simply, this would mean that for every US$10/metric tonne gain in coal prices, Tenaga Nasional would see a 15 to18 percent reduction in earnings. Adding on, the strong crude oil price would weaken U.S. Dollar up to a certain point in time, thus benefiting Tenaga Nasional’s U.S. Dollar-denominated debt amounting to 21.2 percent. We found that for every 1 percent gain in RM/U.S. Dollar, Tenaga Nasional’s earnings would be augmented by 1.2 percent through forex translation.

The sector that would suffer most

Airline companies would be hurt the most. Rising crude oil prices would also put pressure on jet fuel prices and in turn hike up the airlines operating costs. Assuming there is no hedging, every 1 percent gain in crude oil prices would shave Malaysia Airlines’ bottomline by 2 percent and Air Asia by 6 percent. We believe the tolerance level for jet fuel would hover between US$117 and US$125 a barrel. At US$105 per barrel, we expect jet fuel to be around US$119 per barrel, falling within the comfortable zone.

The author is the chief economist of MIDF Amanah Investment Bank Bhd.

32 The 4E Journal

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January effect takes place in most markets

A good year for the auto sector

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With news desk in Singapore, Malaysia and China, we publish magazines that consolidate the latest key news and financial information of all locally listed companies. This includes the financial history, prices, key financial ratios and statistics, as well as research perspectives - all presented in a handy and easy-to-reference magazine. Shares Investment: invest with confidence in 2011.

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The 4E Journal 33

Public Bank’s new fund to invest in mid-to large-cap stocks in Asia Pacific

Making Public Awareness a Top Priority

NEWS IN BRIEF

January - March 2011

L-R: Idris Kasim (Head, AKPK Sabah), Ahmad Abdul Rahim (Manager of BNM, Kota Kinabalu), Poedjo Soesilotomo (Tom) (Chairman, FPAM Sabah Chapter), Grace Chin (Treasurer, FPAM Sabah Chapter), Tan Chee Fui (Discipline, FPAM Sabah

Chapter). Johnny Tann (Publicity & Public Relations, FPAM Sabah Chapter)

The Financial Planning Association of Malaysia (FPAM) Sabah Chapter recently paid a courtesy call to Bank Negara Malaysia and the Credit Counseling and Debt Management Agency (AKPK) at their Kota Kinabalu offices in which the role of FPAM in creating awareness in financial planning issues to the public was highlighted. The entourage also discussed several matters of interest and how we may be able to work together in creating better public awareness in the future.

Public Bank Bhd launched a new fund – PB Asia Pacific Enterprises Fund (PBAPENTF)

– on March 8, 2011. PBAPENTF is an equity fund designed to allow investors to capitalise on the long-term growth potential of a diversified portfolio of companies with market capitalisation of US$1 billion and above in domestic and Asia Pacific markets. PBAPENTF is managed by Public Bank’s wholly-owned subsidiary, Public Mutual Bhd. Public Mutual’s chief executive officer Yeoh Kim Hong said PBAPENTF provides investors with the opportunity to invest in mid-to-large corporations which are better positioned to benefit from the resilient activities in the Asia Pacific region due to their financial strength and dominance in their respective industries. As such, these companies tend to have leading positions and established market shares which will enable them to perform well during favourable and challenging market conditions.

The 4E Journal 33

“After a strong rebound in 2009, global and regional equity markets continued their uptrend in 2010 amidst improving economic activities. Despite the recent

spike in oil prices, regional equity markets are expected to remain underpinned by reasonable valuations and resilient economic growth prospects over the medium-to long-term. Although monetary policies of selected markets are anticipated to tighten in 2011, real interest rates are envisaged to remain low to sustain investment and consumption expenditure,” she added. To achieve increased diversification, PBAPENTF may invest up to 98 percent of its net asset value (NAV) in selected Asia Pacific markets which include South Korea, China, Taiwan, Hong Kong, Philippines, Indonesia, Singapore, Thailand, India, Australia and other permitted countries. The equity exposure of PBAPENTF will generally range from 75 percent to 98 percent of its NAV. PBAPENTF is suitable for investors who wish to participate in the long-term growth prospects of a diversified portfolio of mid-to large-cap stocks listed on domestic and regional markets.

Yeoh: Mid-to-large corporations are able to perform well during favourable and challening market conditions.

34 The 4E Journal

Financial Planning Coalition Supports Recognition of Consumer Confusion Identified by GAO Study Related to Financial Planners

Washington D.C. : The Financial Planning Coalition recently responded to the findings of a Government Accountability Office (GAO) study on the regulation of financial planners. In its study, which was called for as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, the GAO found significant evidence of consumer confusion surrounding the regulation and legal obligations of financial planners. The GAO also found that the full extent of the risk to consumers is murky because regulators do not currently track complaints and disciplinary actions specific to financial planners. While the GAO study identified numerous consumer protection and data collection issues associated with lack of specific, direct regulation of financial planners per se, it concluded that, given available information, an additional layer of regulation for financial planners does not appear to be warranted at this time.

“The Financial Planning Coalition – and the more than 75,000 stakeholders it represents – has championed the need for greatly increased consumer financial protection and the recognition and regulation of financial planning as a distinct profession,” said Charles A. Moran, CFP®, 2011 Chair of the Board of Directors of the Certified Financial Planner Board of Standards, Inc. “While the GAO study did not reach the conclusion we advocated, it recognised significant consumer protection issues and outlined steps to address them. The study will help inform our on-going discussions with policymakers and will provide an important building block in our efforts to achieve recognition of the rapidly growing financial planning profession.”

CFP CERTIFICATIONGLOBAL UPDATESJanuary - March 2011

Study Findings Are Important First Step in Increased Consumer Financial Protection;Coalition Urges Legislation to Regulate the Profession

“The GAO study on financial planning found that consumer confusion exists at many levels and also recommended that, since it is a growing profession, increased discussions, data gathering and information sharing is essential to Congress and regulators as they consider legislation and regulation to effectively oversee financial planners,” said Susan John, CFP®, AIFA®, 2010-11 Chair of the National Association of Personal Financial Advisors. “The GAO confirmed what we have known for years: there is great confusion among the public about the profession of financial planning.”

In relation to consumer protection and data collection issues, the GAO found that:

• Consumers may be unclear about when a financial planner is required

to serve the client’s best interests.• Consumers may not understand or

be able to distinguish among the numerous titles and designations used by financial planners.

• The extent of problems relating to financial planners is not fully known because the Securities and Exchange Commission (SEC) does not track data on complaints, examination results and enforcement activities associated with financial planners.

• The SEC does not track data on financial planners because there are no laws that directly require registration and recordkeeping of financial planners per se.

The Coalition looks forward to participating in the upcoming discussion about how best to address these findings.

The 4E Journal 35

Emerging Markets Drive Global Number of Certified Financial Planner Professional to All-Time High

Denver: Thriving CERTIFIED FINANCIAL PLANNER certification programmes in Brazil, China, India, Indonesia and the Republic of Korea helped to push the global number of CFP professionals to a new high in 2010. Financial Planning Standards Board Ltd (FPSB), owner of the CFP, Certified Financial Planner and CFP Logo marks outside the United States, reported the number of CFP professionals reached 133,756 as of 31 December 2010, up 6.1 percent from 126,016 at year-end 2009.

FPSB Indonesia, which began offering the CFP certification programme in 2007, achieved growth of 52.1 percent in 2010, leading growth among the current 24 FPSB member organisations around the world. FPSB China, which began certifying CFP professionals in 2006, posted growth of 47.1 percent. FPSB India, offering CFP certification since 2003, achieved growth in 2010 of 41.7 percent. Instituto Brasileiro de Certificação de Profissionais Financeiros

(IBCPF), which began offering CFP certification in Brazil in 2003, grew its number of CFP professionals by 28.6 percent in 2010, and FPSB Korea, which began certifying in 2001, achieved 26.5 percent growth.

Despite unsettled financial markets around the world, growth of the global number of CFP professionals has averaged 6.7 percent over the past five years, and CFP certification continues to emerge as a global financial planning credential. By the end of 2010, the majority (71,805 or 53.7 percent) of the world’s CFP professionals conducted business outside the U.S. The number of CFP professionals outside the U.S. more than tripled since 2000, and the global number of CFP professionals more than doubled during the same time period.

“In emerging markets, where financial planning is still a relatively new concept to consumers, more and more financial planning professionals are seeking

to align themselves with the most widely recognised and trusted financial planning certification around the world,” said Corinna Dieters, chairperson of the FPSB Board of Directors. “CFP certification demonstrates that an individual has met rigorous competency, ethics and practice standards for financial planning. Increasingly, both consumers and financial planning professionals are looking to CFP certification as the global symbol of excellence in financial planning.”

“CFP professionals bring added depth and credibility to adviser-client relationships, particularly in uncertain financial times,” said Noel Maye, FPSB CEO. “Trust is key in developing and maintaining strong adviser-client relationships, and employers, practitioners and clients are responding to the CFP certification standards, which include adherence to a strict code of ethics, in which CFP professionals commit to placing their clients’ interests first.”

133,756 CFP Professionals Worldwide Represents 6.1 Percent Increase Over Previous Year

FINANCIALPLANNINGCOALITION

“The Coalition hopes that Congress and the various regulators who oversee the activities of financial planners heed the GAO recommendation to continue to study this issue and consider recommending an effective regulatory structure in the future,” said Marty Kurtz, CFP®, AIFA® and 2011 Financial Planning Association President.

“We believe the study highlights the need for taking important steps to better protect consumers.”

The GAO study noted that many organisations they spoke with did not favour a structural change in the regulation of financial planners. It is not surprising that those who are taking advantage of regulatory gaps oppose additional regulation. However, consumers favour more regulatory protections. A survey commissioned by the Financial Planning Coalition found that 83 percent of voters surveyed supported increased regulation of those who identify themselves as financial planners.

About the Financial Planning Coalition: The Financial Planning Coalition is a collaboration of Certified Financial Planner Board of Standards (CFP Board), the Financial Planning Association® (FPA®), and the National Association of Personal Financial Advisors (NAPFA) to advise legislators and regulators on how to best protect consumers by ensuring financial planning services are delivered with fiduciary accountability and transparency.

To learn more, please visit www.financialplanningcoalition.com

ABOUT CFP BOARD: The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognised standard of excellence for personal financial planning. The Board of Directors, in furthering CFP Board’s mission, acts on behalf of the public, CFP® certificants and other stakeholders. CFP Board owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and on-going certification requirements. CFP Board currently authorises more than 62,000 individuals to use these marks in the U.S.

36 The 4E Journal

CHAPTER ACTIVITIES

January - March 2011

CE COURSE: SMART PROPERTY INVESTMENT STRATEGIES

Speakers: Ho Chin Soon & Michael Geh Thuan PengDate: March 5, 2011 / SaturdayVenue: Eastin Hotel, Queensbay, PenangRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PMFee: Early Bird Special – RM200 ( FPAM Member), RM250 (Public) by February 21, 2011 Normal – RM250 ( FPAM Member), RM300 (Public)

CE COURSE: HOW TO INVEST SENSIBLY WITH OPTIONS

Speaker: Wai-Yee Chen Date: April 15, 2011 / FridayVenue: Gurney Hotel, PenangRegistration: 9:30AM – 10:00AMTime: 10:00AM – 6:00PMFee: Early Bird Special – RM200 ( FPAM Member), RM250 (Public) by April 1, 2011 Normal – RM250 ( FPAM Member), RM300 (Public)

CHAPTER GENERAL MEETING / NETWORKING NITE

Date: April 15, 2011 / FridayTime: 6:00PM – 10:00PMVenue: Gurney Hotel, Penang

CE COURSE: PRACTICAL TIPS FOR BUY-SELL ARRANGEMENTS AND BUSINESS SUCCESSION

Speaker: Azhar Iskandar HewDate: May 21, 2011 / SaturdayVenue: Eastin Hotel, Queensbay, PenangRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PMFee: Early Bird Special – RM200 ( FPAM Member), RM250 (Public) by May 6, 2011 Normal – RM250 ( FPAM Member), RM300 (Public)

CE COURSE: SMART PROPERTY INVESTMENT STRATEGIES

Speakers: Ho Chin Soon & Michael Geh Thuan PengDate: March 26, 2011 / SaturdayVenue: Tower Regency Hotel, Ipoh, PerakRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PMFee: Normal – RM120 ( FPAM Member), RM160 (Public)

CE COURSE: FOREIGN ExCHANGE AND DERIVATIVES STRATEGIES: INSTRUMENTS AND PRACTICAL SOLUTION FOR PRIVATES CLIENTS

Speaker: Ding Lai HongDate: July 9, 2011 / FridayVenue: Tower Regency Hotel, Ipoh, PerakRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PMFee: Normal – RM150 ( FPAM Member), RM200 (Public)

PENANG

IPOH

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The 4E Journal 37

BINTULU NETWORKING NITE

Date: March 19, 2011 / FridayTime: 7:00PMVenue: Level 5, New World Suite , Bintulu, Sarawak

CE COURSE: SMART PROPERTY INVESTMENT STRATEGIES

Speakers: Ho Chin Soon & Michael Geh Thuan PengDate: April 2, 2011 / SaturdayVenue: Harbour View Hotel, Kuching, Sarawak Registration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PMFee: Early Bird Special – RM200 ( FPAM Member), RM250 (Public) by March 10, 2011 Normal – RM250 ( FPAM Member), RM300 (Public)

CE COURSE: FOREIGN ExCHANGE AND DERIVATIVES STRATEGIES: INSTRUMENTS AND PRACTICAL SOLUTION FOR PRIVATES CLIENTS

Speaker: Ding Lai HongDate: September 10, 2011 / SaturdayVenue: Harbour View Hotel, Kuching, SarawakRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PMFee: Early Bird Special – RM200 ( FPAM Member), RM250 (Public) by August 10, 2011 Normal – RM250 ( FPAM Member), RM300 (Public)

CHAPTER GENERAL MEETING / NETWORKING NITE

Date: December 11, 2011 / SundayTime: 7:00PMVenue: Harbour View Hotel, Kuching, Sarawak

CE COURSE: MORTGAGE REDUCTION PLANNING: ISSUES & STRATEGIES

Speakers: Francis ChinDate: March 26, 2011 / SaturdayVenue: Promenade Hotel, Kota Kinabalu, Sabah Registration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PMFee: Early Bird Special – RM70 ( FPAM Member), RM100 (Public) by March 18, 2011 Normal – RM80 ( FPAM Member), RM110 (Public)

CE COURSE: SMART PROPERTY INVESTMENT STRATEGIES

Speaker: Ho Chin Soon & Michael Geh Thuan PengDate: April 16, 2011 / SaturdayVenue: Sabah Hotel, Sandakan, SabahRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PMFee: Early Bird Special – RM120 ( FPAM Member), RM150 (Public) by April 5, 2011 Normal – RM150 ( FPAM Member), RM180 (Public) Half Day – RM90 (FPAM member), RM120 (Public

CE COURSE: SMART PROPERTY INVESTMENT STRATEGIES

Speaker: Ho Chin Soon & Michael Geh Thuan PengDate: May 14, 2011 / SaturdayVenue: Promenade Hotel, Tawau, SabahRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PMFee: Early Bird Special – RM120 ( FPAM Member), RM150 (Public) by April 25, 2011 Normal – RM150 ( FPAM Member), RM180 (Public) Half Day – RM90 (FPAM member), RM120 (Public

SARAWAK

SABAH

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CE COURSES

January - March 2011

HOW TO INVEST SENSIBLY WITH OPTIONS(A Securities Commission CPE-accredited course)

Speaker: Wai-Yee ChenDate: April 20, 2011 / Wednesday [ full day ]Venue: Dewan Berjaya, Bukit Kiara Equestrian & Country Resort Jalan Bukit Kiara, 60000 Kuala LumpurRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PM Fee: Early Bird Special – RM400 ( FPAM Member) , RM550 (Public) by April 1, 2011 Normal – RM600 ( FPAM Member), RM750 (Public)

AN INSIGHT INTO GLOBAL MARKETS DEVELOPMENT WITH EMPHASIS ON CHINA AND VIETNAM(A Securities Commission CPE-accredited course)

Speaker: Anthony DassDate: May 21, 2011 / Saturday [ full day ]Venue: Dewan Berjaya, Bukit Kiara Equestrian & Country Resort Jalan Bukit Kiara, 60000 Kuala LumpurRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PM Fee: Early Bird Special – RM280 ( FPAM Member) , RM350 (Public) by May 1, 2011 Normal – RM320 ( FPAM Member), RM380 (Public)

PRACTICAL TIPS FOR BUY-SELL ARRANGEMENTS AND BUSINESS SUCCESSION(A Securities Commission CPE-accredited course)

Speaker: Azhar Iskandar HewDate: June 18, 2011 / Saturday [ full day ]Venue: Dewan Berjaya, Bukit Kiara Equestrian & Country Resort Jalan Bukit Kiara, 60000 Kuala LumpurRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PM Fee: Early Bird Special – RM280 ( FPAM Member) , RM350 (Public) by June 1, 2011 Normal – RM320 ( FPAM Member), RM380 (Public)

UNDERSTANDING ALTERNATIVE INVESTMENTS(A Securities Commission CPE-accredited course)

Speaker: Robert Bennett-LovesyDate: July 16, 2011 / Saturday [ full day ]Venue: Dewan Berjaya, Bukit Kiara Equestrian & Country Resort Jalan Bukit Kiara, 60000 Kuala LumpurRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:30PM Fee: Early Bird Special – RM280 ( FPAM Member) , RM400 (Public) by July 1, 2011 Normal – RM320 ( FPAM Member), RM450 (Public)

FOREIGN ExCHANGE - INVESTMENT/TRADING STRATEGIES AND APPLICATIONS FOR THE PRIVATE INVESTOR(A Securities Commission CPE-accredited course)

Speaker: Y K FongDate: August 20, 2011 / Saturday [ full day ]Venue: Dewan Berjaya, Bukit Kiara Equestrian & Country Resort Jalan Bukit Kiara, 60000 Kuala LumpurRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:30PM Fee: Early Bird Special – RM280 ( FPAM Member) , RM400 (Public) by August 1, 2011 Normal – RM320 ( FPAM Member), RM450 (Public)

SHARIAH PERSPECTIVE OF FINANCIAL PLANNING AND WEALTH MANAGEMENT(A Securities Commission CPE-accredited course)

Speaker: Mahadzir AhmadDate: October 22, 2011 / Saturday [ full day ]Venue: Dewan Berjaya, Bukit Kiara Equestrian & Country Resort Jalan Bukit Kiara, 60000 Kuala LumpurRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PM Fee: Early Bird Special – RM280 ( FPAM Member) , RM350 (Public) by October 1, 2011 Normal – RM320 ( FPAM Member), RM380 (Public)

WEALTH MAxIMIzATION THROUGH TAx PLANNING(A Securities Commission CPE-accredited course)

Speaker: K P Bose DasanDate: November 19, 2011 / Saturday [ full day ]Venue: Dewan Berjaya, Bukit Kiara Equestrian & Country Resort Jalan Bukit Kiara, 60000 Kuala LumpurRegistration: 8:30AM – 9:00AMTime: 9:00AM – 5:00PM Fee: Early Bird Special – RM280 ( FPAM Member) , RM350 (Public) by November 1, 2011 Normal – RM320 ( FPAM Member), RM380 (Public)

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Note: Programmes are subject to changes.

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