THE Malaysian Employers Fund (MEF) announced its findings of four latest publications for 2018. The publications focus on the forecast of salary increases and bonuses for 2019. The outlook was “bleak”, according to the survey due to the global recession, increasing social costs and political uncertainties following GE14 which were among factors influencing the employers’ cautious attitude.
A few incentives were placed into the labour structure of the companies surveyed including productivity linked wage system (PLWS) and the Discrimination Reporting Procedure.
About 90% of companies and more indicated that the main reasons that they implemented PLWS was to reward good employees followed by aiming to improve productivity (which more than 80% responded) and to motivate average employees (more than 70%).
The findings also focused on the types of leaves provided where all participating companies provided annual leave and sick leave for top/senior managers, managers, execu- tives and non-executives.
The average total hours of total working hours per week for top/senior managers and managers were considered where they worked 41 hours compared to the executives where the average total working hours per week was 42 hours. In the case of non-executives the average total working hours was 43 hours.
About 42.5% of respondent companies implemented flexible working hours at the workplace. With implementation of flexible work arrangements 82.4% of the respondent companies indicated that there was increased employees’ engagement, commitment and satisfaction, quality of work and quantity of output (62.7%) and the company’s ability to retain talent (62.7%).
The survey for executives and non-executives were participated by 242 companies from manufacturing and non-manufacturing sectors.
The executive report covered 160 benchmark positions of 14330 executives while the non-executives report covered 324654 non executives with 109 benchmark positions.- The Star
Prized
job: While long-term security like the pension scheme free healthcare
and easy loans have been among the perks of joining the public service,
many job seekers now want to become civil servants because it pays well.
— Bernama
BUENOS AIRES (Reuters) - China and the United States agreed to a ceasefire in their bitter trade war on Saturday after high-stakes talks in Argentina between U.S. President Donald Trump and Chinese President Xi Jinping, including no escalated tariffs on Jan. 1.
Trump will leave tariffs on $200 billion worth of Chinese imports at 10 percent at the beginning of the new year, agreeing to not raise them to 25 percent "at this time", the White House said in a statement.
"China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries," it said.
"China has agreed to start purchasing agricultural product from our farmers immediately."
The two leaders also agreed to immediately start talks on structural changes with respect to forced technology transfers, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, the White House said.
Both countries agreed they will try to have this "transaction" completed within the next 90 days, but if this does not happen then the 10 percent tariffs will be raised to 25 percent, it added.
The Chinese government's top diplomat, State Councillor Wang Yi, said the negotiations were conducted in a "friendly and candid atmosphere".
"The two presidents agreed that the two sides can and must get bilateral relations right," Wang told reporters, adding they agreed to further exchanges at appropriate times.
"Discussion on economic and trade issues was very positive and constructive. The two heads of state reached consensus to halt the mutual increase of new tariffs," Wang said.
"China is willing to increase imports in accordance with the needs of its domestic market and the people's needs, including marketable products from the United States, to gradually ease the imbalance in two-way trade."
"The two sides agreed to mutually open their markets, and as China advances a new round of reforms, the United States' legitimate concerns can be progressively resolved."
The two sides would "step up negotiations" towards full elimination of all additional tariffs, Wang said.
The announcements came after Trump and Xi sat down with their aides for a working dinner at the end of a two-day gathering of world leaders in Buenos Aires, their dispute having unnerved global financial markets and weighed on the world economy.
After the 2-1/2 hour meeting, White House chief economist Larry Kudlow told reporters the talks went "very well," but offered no specifics as he boarded Air Force One headed home to Washington with Trump.
China's goal was to persuade Trump to abandon plans to raise tariffs on $200 billion of Chinese goods to 25 percent in January, from 10 percent at present. Trump had threatened to do that, and possibly add tariffs on $267 billion of imports, if there was no progress in the talks.
With the United States and China clashing over commerce, financial markets will take their lead from the results of the talks, widely seen as the most important meeting of U.S. and Chinese leaders in years.
The encounter came shortly after the Group of 20 industrialized nations backed an overhaul of the World Trade Organization (WTO), which regulates international trade disputes, marking a victory for Trump, a sharp critic of the organisation.
Trump told Xi at the start of their meeting he hoped they would achieve "something great" on trade for both countries. He struck a positive note as he sat across from Xi, despite the U.S. president's earlier threats to impose new tariffs on Chinese imports as early as the next year.
He suggested that the "incredible relationship" he and Xi had established would be "the very primary reason" they could make progress on trade.
Xi told Trump that only through cooperation could the United States and China serve the interest of peace and prosperity. Washington and Beijing have also increasingly been at odds over security in the Asia-Pacific region.
At the same time, Trump again raised with Xi his concern about the synthetic opioid fentanyl being sent from China to the United States, urging the Chinese leader to place it in a "restricted category" of drugs that would criminalize it.
The White House said Xi, "in a wonderful humanitarian gesture", had agreed to designate fentanyl a controlled substance.
Xi also said that he was open to approving the previously unapproved Qualcomm-NXP deal should it again be presented to him, the White House added.
"This was an amazing and productive meeting with unlimited possibilities for both the United States and China. It is my great honour to be working with President Xi," Trump said in the statement.
WTO REFORMS
Earlier on Saturday, the leaders of the world's top economies called for WTO reform in their final summit statement.
Officials expressed relief that agreement on the communique was reached after negotiators worked through the night to overcome differences over language on climate change.
The final text recognised trade as an important engine of global growth but made only a passing reference to "the current trade issues" after the U.S. delegation won a battle to keep any mention of protectionism out of the statement.
Trump has long railed against China's trade surplus with the United States, and Washington accuses Beijing of not playing fairly on trade. China calls the United States protectionist and has resisted what it views as attempts to intimidate it.
The two countries are also at odds over China's extensive claims in the South China Sea and U.S. warship movements through the highly sensitive Taiwan Strait.
In addition to tariffs on Chinese goods, Trump has imposed tariffs on steel and aluminum imports into the United States this year. Numerous countries have filed litigation at the WTO to contest the levies.
The United States is unhappy with what it says is the WTO's failure to hold China to account for not opening up its economy as envisioned when China joined the body in 2001. The European Union is also pushing for sweeping changes to how the WTO operates.
G20 delegates said negotiations on the summit statement proceeded more smoothly than at a meeting of Asia-Pacific leaders two weeks ago, where disagreement on protectionism and unfair trading practices prevented a consensus.
European officials said a reference to refugees and migration - a sensitive issue for Trump's administration - was excised to ensure consensus.
On climate change, the United States once again marked its differences with the rest of the G20 by reiterating in the statement its decision to withdraw from the Paris Agreement and its commitment to using all kinds of energy sources.
The other members of the group reaffirmed their commitment to implement the Paris deal and tackle climate change.
International Monetary Fund (IMF) Managing Director Christine Lagarde said high levels of debt accumulated by emerging market nations was a pressing concern.
U.S. officials said a call by G20 leaders for the IMF and World Bank to improve monitoring debt levels was aimed at ensuring that developing economies did not become to heavily indebted to China in return for infrastructure projects.
U.S. officials have warned about China's increasing influence across swaths of the developing world, including Latin America. G20 summit host Argentina is expected to sign a series of deals with China on Sunday during a one-day state visit by Xi.
Apart from trade and climate change, Russia's seizure of Ukrainian vessels drew condemnation from other G20 members, while the presence of Crown Prince Mohammed bin Salman at the summit raised an awkward dilemma for leaders.
Saudi Arabia's de facto ruler arrived amid controversy over the killing of Saudi journalist Jamal Khashoggi, though Saudi officials have said the prince had no prior knowledge of the murder.
The leader of the OPEC heavyweight had a series of bilateral meetings at the summit, including a closely watched encounter with Russian President Vladimir Putin.
(Reporting by Roberta Rampton, Michael Martina, Matt Spetalnick, Maximilian Heath, Scott Squires, Cassandra Garrison, Daniel Flynn and Kylie Maclellan in Buenos Aires; Dave Shepardson and Humeyra Pamuk in Washington, Ben Blanchard in Beijing and John Ruwitch in Shanghai; writing by Matt Spetalnick and Daniel Flynn; editing by Ross Colvin, Alistair Bell, Jonathan Oatis and Will Dunham)
Peter Navarro, the controversial White House trade policy adviser and a
famous China hawk, will not be on the guest list when US President
Donald Trump meets his Chinese counterpart Xi Jinping in Buenos Aires on
December 1, according to a source with knowledge of the matter.
Sino-US agreement an important step forward
In talks on Saturday at Buenos Aires in Argentina,
Chinese President Xi Jinping and US President Donald Trump reached an
important consensus on stabilizing trade relations between China and the
US. The two countries will step up negotiations toward elimination of
all additional tariffs and address issues of mutual concern.
BUENOS AIRES (Reuters) - China and the United States agreed to a ceasefire in their bitter trade war on Saturday after high-stakes talks in Argentina between U.S. President Donald Trump and Chinese President Xi Jinping, including no escalated tariffs on Jan. 1.
Trump will leave tariffs on $200 billion worth of Chinese imports at 10 percent at the beginning of the new year, agreeing to not raise them to 25 percent "at this time", the White House said in a statement.
"China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries," it said.
"China has agreed to start purchasing agricultural product from our farmers immediately."
The two leaders also agreed to immediately start talks on structural changes with respect to forced technology transfers, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, the White House said.
Both countries agreed they will try to have this "transaction" completed within the next 90 days, but if this does not happen then the 10 percent tariffs will be raised to 25 percent, it added.
The Chinese government's top diplomat, State Councillor Wang Yi, said the negotiations were conducted in a "friendly and candid atmosphere".
"The two presidents agreed that the two sides can and must get bilateral relations right," Wang told reporters, adding they agreed to further exchanges at appropriate times.
"Discussion on economic and trade issues was very positive and constructive. The two heads of state reached consensus to halt the mutual increase of new tariffs," Wang said.
"China is willing to increase imports in accordance with the needs of its domestic market and the people's needs, including marketable products from the United States, to gradually ease the imbalance in two-way trade."
"The two sides agreed to mutually open their markets, and as China advances a new round of reforms, the United States' legitimate concerns can be progressively resolved."
The two sides would "step up negotiations" towards full elimination of all additional tariffs, Wang said.
The announcements came after Trump and Xi sat down with their aides for a working dinner at the end of a two-day gathering of world leaders in Buenos Aires, their dispute having unnerved global financial markets and weighed on the world economy.
After the 2-1/2 hour meeting, White House chief economist Larry Kudlow told reporters the talks went "very well," but offered no specifics as he boarded Air Force One headed home to Washington with Trump.
China's goal was to persuade Trump to abandon plans to raise tariffs on $200 billion of Chinese goods to 25 percent in January, from 10 percent at present. Trump had threatened to do that, and possibly add tariffs on $267 billion of imports, if there was no progress in the talks.
With the United States and China clashing over commerce, financial markets will take their lead from the results of the talks, widely seen as the most important meeting of U.S. and Chinese leaders in years.
The encounter came shortly after the Group of 20 industrialized nations backed an overhaul of the World Trade Organization (WTO), which regulates international trade disputes, marking a victory for Trump, a sharp critic of the organisation. Trump told Xi at the start of their meeting he hoped they would achieve "something great" on trade for both countries. He struck a positive note as he sat across from Xi, despite the U.S. president's earlier threats to impose new tariffs on Chinese imports as early as the next year.
He suggested that the "incredible relationship" he and Xi had established would be "the very primary reason" they could make progress on trade.
Xi told Trump that only through cooperation could the United States and China serve the interest of peace and prosperity. Washington and Beijing have also increasingly been at odds over security in the Asia-Pacific region.
At the same time, Trump again raised with Xi his concern about the synthetic opioid fentanyl being sent from China to the United States, urging the Chinese leader to place it in a "restricted category" of drugs that would criminalize it.
The White House said Xi, "in a wonderful humanitarian gesture", had agreed to designate fentanyl a controlled substance.
Xi also said that he was open to approving the previously unapproved Qualcomm-NXP deal should it again be presented to him, the White House added.
"This was an amazing and productive meeting with unlimited possibilities for both the United States and China. It is my great honour to be working with President Xi," Trump said in the statement.
WTO REFORMS
Earlier on Saturday, the leaders of the world's top economies called for WTO reform in their final summit statement.
Officials expressed relief that agreement on the communique was reached after negotiators worked through the night to overcome differences over language on climate change.
The final text recognised trade as an important engine of global growth but made only a passing reference to "the current trade issues" after the U.S. delegation won a battle to keep any mention of protectionism out of the statement.
Trump has long railed against China's trade surplus with the United States, and Washington accuses Beijing of not playing fairly on trade. China calls the United States protectionist and has resisted what it views as attempts to intimidate it.
The two countries are also at odds over China's extensive claims in the South China Sea and U.S. warship movements through the highly sensitive Taiwan Strait.
In addition to tariffs on Chinese goods, Trump has imposed tariffs on steel and aluminum imports into the United States this year. Numerous countries have filed litigation at the WTO to contest the levies.
The United States is unhappy with what it says is the WTO's failure to hold China to account for not opening up its economy as envisioned when China joined the body in 2001. The European Union is also pushing for sweeping changes to how the WTO operates.
G20 delegates said negotiations on the summit statement proceeded more smoothly than at a meeting of Asia-Pacific leaders two weeks ago, where disagreement on protectionism and unfair trading practices prevented a consensus.
European officials said a reference to refugees and migration - a sensitive issue for Trump's administration - was excised to ensure consensus.
On climate change, the United States once again marked its differences with the rest of the G20 by reiterating in the statement its decision to withdraw from the Paris Agreement and its commitment to using all kinds of energy sources.
The other members of the group reaffirmed their commitment to implement the Paris deal and tackle climate change.
International Monetary Fund (IMF) Managing Director Christine Lagarde said high levels of debt accumulated by emerging market nations was a pressing concern.
U.S. officials said a call by G20 leaders for the IMF and World Bank to improve monitoring debt levels was aimed at ensuring that developing economies did not become to heavily indebted to China in return for infrastructure projects.
U.S. officials have warned about China's increasing influence across swaths of the developing world, including Latin America. G20 summit host Argentina is expected to sign a series of deals with China on Sunday during a one-day state visit by Xi.
Apart from trade and climate change, Russia's seizure of Ukrainian vessels drew condemnation from other G20 members, while the presence of Crown Prince Mohammed bin Salman at the summit raised an awkward dilemma for leaders.
Saudi Arabia's de facto ruler arrived amid controversy over the killing of Saudi journalist Jamal Khashoggi, though Saudi officials have said the prince had no prior knowledge of the murder.
The leader of the OPEC heavyweight had a series of bilateral meetings at the summit, including a closely watched encounter with Russian President Vladimir Putin.
(Reporting by Roberta Rampton, Michael Martina, Matt Spetalnick, Maximilian Heath, Scott Squires, Cassandra Garrison, Daniel Flynn and Kylie Maclellan in Buenos Aires; Dave Shepardson and Humeyra Pamuk in Washington, Ben Blanchard in Beijing and John Ruwitch in Shanghai; writing by Matt Spetalnick and Daniel Flynn; editing by Ross Colvin, Alistair Bell, Jonathan Oatis and Will Dunham)
Peter Navarro, the controversial White House trade policy adviser and a famous China hawk, will not be on the guest list when US President Donald Trump meets his Chinese counterpart Xi Jinping in Buenos Aires on December 1, according to a source with knowledge of the matter.
Sino-US agreement an important step forward In talks on Saturday at Buenos Aires in Argentina, Chinese President Xi Jinping and US President Donald Trump reached an important consensus on stabilizing trade relations between China and the US. The two countries will step up negotiations toward elimination of all additional tariffs and address issues of mutual concern.
A property, no matter how great-looking it is, is only as good as its management and maintenance. It will look clean and polished when it is new but the good news is, it can still look as good even as it ages.
According to the Strata Management Act 2013 (SMA 2013) which came into effect in June 2015, a strata owner or occupier needs to pay a monthly maintenance fee or service charge to the Joint Management Body (JMB) or Management Corporation (MC) which will be used to manage and maintain the common property of the development.
Other than the maintenance fee, strata owners are also required to contribute to the sinking fund which is normally at the rate of 10% of the total amount of charges.
“A sinking fund is a reserve fund collected from the strata owner for future expenditure which is typically less predictable and cost a lot more than the usual maintenance fee. The sinking fund is usually used for large scale repairs such as a painting job or refurbishment of the interiors of common facilities,” says Chur Associates managing director Chris Tan.
However, some owners may feel that the maintenance fee is too much. But how much is too much? How is the fee amount calculated or set? Is there a formula or a guideline?
Formula to derive the share units
Under the SMA 2013 and Strata Titles Act 1985 (STA), a residential or commercial unit is technically known as a parcel and each parcel has a share value that is expressed in whole numbers under the STA.
“Upon the approval of computation and allocation of share units prepared by the licensed land surveyor, the director of Land and Mines will issue the Certificate of Share Unit. To derive the share units in a strata scheme, there is a standard formula under the Fourth Schedule of the Strata Titles Rules 2015,” explains Burgess Rawson Malaysia managing director Wong Kok Soo.
The standard formula for maintenance fee:
Refer to Table A for an example of how the share unit is derived for an apartment parcel.
What does the maintenance fee cover?
The MC chairman of Sri Penaga, one of Bangsar’s oldest condominiums, Khaw Chay Tee shares with EdgeProp.my that one of the biggest components in the operations expenditure of a residential condominium is security, followed by the property management staffing and cleaning.
“Normally these components make up 50% of your service charge. So at the end of the day, it really boils down to how well-managed that property is. If you are able to manage the property well, then you can keep the cost reasonable. There are some condominiums where the MC likes to carry out projects which incur costs, but that is a separate matter. As each condominium differs in its number of facilities and the density of the development, it is not so easy to compare and ask why this condominium in Bangsar is different from that condominium in Bangsar,” says Khaw.
Knight Frank senior executive director Kuruvilla Abraham concurs that the service charge will vary depending on the service level the JMB or MC requires.
“One can find cheaper options for the various services required which no doubt will result in lower service charges. However, don’t expect good service levels. The right thing to do is to get value-for-money services that commensurate with the expected service levels,” he says.
It also depends on the design of the development, he adds.
“The development with a reasonable number of facilities and a greater number of units will generally pay a lower proportion of service charge compared to one with similar facilities but with lower density.”
Furthermore, developments with more facilities such as fountains, gardens or swimming pools would naturally command a higher fee as more maintenance is needed.
When it comes to maintenance, the level of quality is subjective, reminds Chur Associates’ Tan. Hence, questions often arise on whether what they are paying is actually put to good use.
Kuruvilla points out that he has yet to come across a developer that has charged parcel owners more than what they are supposed to pay. (Photo by Knight Frank)
“What is the definition of “clean” to you? For some, clean means I don’t see any rubbish. For others, it means it has to be squeaky clean and sparkling. We cannot even come up with an industrial standard for door size and window size, how do we even budget the cleaning cost then? If I were the cleaning company, how would I charge you if your windows are bigger than others? Do I charge more? Or can I say the unit price is RM2 per window per cleaning [regardless of size]?” Tan questions.
He adds that the priorities of residents in different projects mean the maintenance fee charged for each development would be different.
“Some residents place a lot of emphasis on security, so they would rather [the JMB or MC] spend more money hiring guards from a prestigious company while there may be some who think that [the JMB or MC] should spend the money to clean the swimming pool daily because they use it often,” he explains.
Wong: To derive the share units in a strata scheme, there is a standard formula under the Fourth Schedule of the Strata Titles Rules 2015. (Photos by Low Yen Yeing/EdgeProp.my)
The problem with a low maintenance fee
The Malaysian Institute of Property and Facility Managers (MIPFM) president Sarkunan Subramaniam tells EdgeProp.my that problems often arise when the property developers set a lower-than-normal maintenance fee in the initial period to induce sales.
“During the first two years, the equipment is still under the defects and liability period, so if say, the swimming pool has an issue, you can just call the technician to come over for free. However, when the JMB or MC takes over when the warranty period has passed, cost will start to be incurred,” says Sarkunan.
Under the STA 2013, developers are not supposed to pass on any deficits or liabilities to the JMB and MC.
Chur Associate’s Tan says problems can also crop up later when a developer designs a very over-the-top facility or development but prices the property at a low selling price, hence attracting the wrong user/buyer profile to the project.
Sarkunan: Problems often arise when the property developers set a lower than normal maintenance fee in the initial period to induce sales.
“If I ask you what you want in your development, you will surely say you want everything. But nobody tells you that in order to have everything, moving forward, the monthly contribution will be higher. When the entry point is low, everybody wants to buy but nobody thinks about the maintenance fee in future.
“On many occasions, it is not about who gives the best facility but who is paying for it. Are you going to use it? How often do you go to your condo’s gym or would you rather go to a gym outside? Why? Maybe because you have your own personal trainer or you don’t want to be seen by your neighbour. So are we overdesigning and overproviding?” Tan questions.
In accordance with the Strata Management Act 2013 (Act 757) (SMA), developers shall hand over the maintenance and management of the strata development (common property) to the JMB not later than 12 months of vacant possession or the MC, should the strata titles be issued and transferred to the purchasers, whichever is earlier.
The items developers are required to hand over include the list of assets, fixtures and fittings, as-built plans, operation manuals as well as the audited accounts of the service charges, deposits and sinking fund as prescribed under the SMA via Form 4 (for JMB) and Form 13 (for MC).
The JMB and MC can then decide by votes or by appointing a registered property management company to suggest an amount for the maintenance fee.
“The owner has the right to request to see the accounts during the Annual General Meeting related to expenditure and raise the matter during the meeting,” says Knight Frank’s Kuruvilla.
However, he points out that he has yet to come across a developer that has charged the parcel owners more than what they are supposed to pay. In fact, the chances are higher that due to non-payment, the management account is likely to be in deficit resulting in there being insufficient funds to carry out proper maintenance and management of the development.
The problem with strata living is, everybody wants to have a well-maintained place to live but not everyone is prepared to pay for it.
“This is why the government passed the Strata Management Act 2013 (and Acts before this) so that after one year post development, it will give the parcel purchasers/proprietors the opportunity to manage the property and thereby giving them an understanding by getting first-hand knowledge in what it takes to maintain and manage a development well. Until one is directly involved, one will not be able to appreciate why service charges have to be paid on time to ensure there is sufficient funds to pay for the maintenance and management of the development.”
This story first appeared in the EdgeProp.my pullout on Nov 30, 2018. You can access back issues here..
While young adults all over the world are renting homes, successful Malaysians and Singaporeans prefer to own homes instead of cars, as soon as they get their first pay cheque.
Instead of blowing their cash on pricey gadgets, young Malaysians are saving up for their first home.
A property, no matter how great-looking it is, is only as good as its management and maintenance. It will look clean and polished when it is new but the good news is, it can still look as good even as it ages.
According to the Strata Management Act 2013 (SMA 2013) which came into effect in June 2015, a strata owner or occupier needs to pay a monthly maintenance fee or service charge to the Joint Management Body (JMB) or Management Corporation (MC) which will be used to manage and maintain the common property of the development.
Other than the maintenance fee, strata owners are also required to contribute to the sinking fund which is normally at the rate of 10% of the total amount of charges.
“A sinking fund is a reserve fund collected from the strata owner for future expenditure which is typically less predictable and cost a lot more than the usual maintenance fee. The sinking fund is usually used for large scale repairs such as a painting job or refurbishment of the interiors of common facilities,” says Chur Associates managing director Chris Tan.
However, some owners may feel that the maintenance fee is too much. But how much is too much? How is the fee amount calculated or set? Is there a formula or a guideline?
Formula to derive the share units
Under the SMA 2013 and Strata Titles Act 1985 (STA), a residential or commercial unit is technically known as a parcel and each parcel has a share value that is expressed in whole numbers under the STA.
“Upon the approval of computation and allocation of share units prepared by the licensed land surveyor, the director of Land and Mines will issue the Certificate of Share Unit. To derive the share units in a strata scheme, there is a standard formula under the Fourth Schedule of the Strata Titles Rules 2015,” explains Burgess Rawson Malaysia managing director Wong Kok Soo.
The standard formula for maintenance fee:
Refer to Table A for an example of how the share unit is derived for an apartment parcel.
What does the maintenance fee cover?
The MC chairman of Sri Penaga, one of Bangsar’s oldest condominiums, Khaw Chay Tee shares with EdgeProp.my that one of the biggest components in the operations expenditure of a residential condominium is security, followed by the property management staffing and cleaning.
“Normally these components make up 50% of your service charge. So at the end of the day, it really boils down to how well-managed that property is. If you are able to manage the property well, then you can keep the cost reasonable. There are some condominiums where the MC likes to carry out projects which incur costs, but that is a separate matter. As each condominium differs in its number of facilities and the density of the development, it is not so easy to compare and ask why this condominium in Bangsar is different from that condominium in Bangsar,” says Khaw.
Knight Frank senior executive director Kuruvilla Abraham concurs that the service charge will vary depending on the service level the JMB or MC requires.
“One can find cheaper options for the various services required which no doubt will result in lower service charges. However, don’t expect good service levels. The right thing to do is to get value-for-money services that commensurate with the expected service levels,” he says.
It also depends on the design of the development, he adds.
“The development with a reasonable number of facilities and a greater number of units will generally pay a lower proportion of service charge compared to one with similar facilities but with lower density.”
Furthermore, developments with more facilities such as fountains, gardens or swimming pools would naturally command a higher fee as more maintenance is needed.
When it comes to maintenance, the level of quality is subjective, reminds Chur Associates’ Tan. Hence, questions often arise on whether what they are paying is actually put to good use.
Kuruvilla points out that he has yet to come across a developer that has charged parcel owners more than what they are supposed to pay. (Photo by Knight Frank)
“What is the definition of “clean” to you? For some, clean means I don’t see any rubbish. For others, it means it has to be squeaky clean and sparkling. We cannot even come up with an industrial standard for door size and window size, how do we even budget the cleaning cost then? If I were the cleaning company, how would I charge you if your windows are bigger than others? Do I charge more? Or can I say the unit price is RM2 per window per cleaning [regardless of size]?” Tan questions.
He adds that the priorities of residents in different projects mean the maintenance fee charged for each development would be different.
“Some residents place a lot of emphasis on security, so they would rather [the JMB or MC] spend more money hiring guards from a prestigious company while there may be some who think that [the JMB or MC] should spend the money to clean the swimming pool daily because they use it often,” he explains.
Wong: To derive the share units in a strata scheme, there is a standard formula under the Fourth Schedule of the Strata Titles Rules 2015. (Photos by Low Yen Yeing/EdgeProp.my)
The problem with a low maintenance fee
The Malaysian Institute of Property and Facility Managers (MIPFM) president Sarkunan Subramaniam tells EdgeProp.my that problems often arise when the property developers set a lower-than-normal maintenance fee in the initial period to induce sales.
“During the first two years, the equipment is still under the defects and liability period, so if say, the swimming pool has an issue, you can just call the technician to come over for free. However, when the JMB or MC takes over when the warranty period has passed, cost will start to be incurred,” says Sarkunan.
Under the STA 2013, developers are not supposed to pass on any deficits or liabilities to the JMB and MC.
Chur Associate’s Tan says problems can also crop up later when a developer designs a very over-the-top facility or development but prices the property at a low selling price, hence attracting the wrong user/buyer profile to the project.
Sarkunan: Problems often arise when the property developers set a lower than normal maintenance fee in the initial period to induce sales.
“If I ask you what you want in your development, you will surely say you want everything. But nobody tells you that in order to have everything, moving forward, the monthly contribution will be higher. When the entry point is low, everybody wants to buy but nobody thinks about the maintenance fee in future.
“On many occasions, it is not about who gives the best facility but who is paying for it. Are you going to use it? How often do you go to your condo’s gym or would you rather go to a gym outside? Why? Maybe because you have your own personal trainer or you don’t want to be seen by your neighbour. So are we overdesigning and overproviding?” Tan questions.
In accordance with the Strata Management Act 2013 (Act 757) (SMA), developers shall hand over the maintenance and management of the strata development (common property) to the JMB not later than 12 months of vacant possession or the MC, should the strata titles be issued and transferred to the purchasers, whichever is earlier.
The items developers are required to hand over include the list of assets, fixtures and fittings, as-built plans, operation manuals as well as the audited accounts of the service charges, deposits and sinking fund as prescribed under the SMA via Form 4 (for JMB) and Form 13 (for MC).
The JMB and MC can then decide by votes or by appointing a registered property management company to suggest an amount for the maintenance fee.
“The owner has the right to request to see the accounts during the Annual General Meeting related to expenditure and raise the matter during the meeting,” says Knight Frank’s Kuruvilla.
However, he points out that he has yet to come across a developer that has charged the parcel owners more than what they are supposed to pay. In fact, the chances are higher that due to non-payment, the management account is likely to be in deficit resulting in there being insufficient funds to carry out proper maintenance and management of the development.
The problem with strata living is, everybody wants to have a well-maintained place to live but not everyone is prepared to pay for it.
“This is why the government passed the Strata Management Act 2013 (and Acts before this) so that after one year post development, it will give the parcel purchasers/proprietors the opportunity to manage the property and thereby giving them an understanding by getting first-hand knowledge in what it takes to maintain and manage a development well. Until one is directly involved, one will not be able to appreciate why service charges have to be paid on time to ensure there is sufficient funds to pay for the maintenance and management of the development.”
This story first appeared in the EdgeProp.my pullout on Nov 30, 2018. You can access back issues here..
While young adults all over the world are renting homes, successful
Malaysians and Singaporeans prefer to own homes instead of cars, as soon
as they get their first pay cheque.
Instead of blowing their cash on pricey gadgets, young Malaysians are saving up for their first home.
