FUD - A GOOD DISEASE

Pictures: Men with FUD Disease.

-relevant to all who wants to take control of their lives, achieve their ambitions and succeed

Dear Readers : At the bottom of article , you can rate this article by ticking the boxes if its "FUN" , "INTERESTING" OR "COOL"

One do well to ask:
"If I don't graduate as ACCA Affliate - Will my current/future boss continue to exploit me for cheap labour and overwork me? Will younger chaps armed with overseas degree leapfrogged me on promotions? Will I accept the fact I am not realising my fullest potential? Can I provide best materially for my love ones - parents, spouse, kids and all."

Only the Paranoid Survives
The previous paper to P3 (BA), Paper 3.5, I gave a lecture about INTEL's boss Andrew Grove's ground breaking article that "Only the Paranoid Survives". Research shows that the Top 1000 largest companies at the beginning of 20th Century has all but lived less than a human lifespan. To be exact, only 12 remained relevant commercially. Once a giant ICI Paint (UK) Limited, was removed as a component stock from London Stock Exchange Index points as it no longer is considered large firm. Even IBM, the once IT titan is a fifth in size compared to new giants like Google and Intel. In short, to survive, you have to feel mightily insecure that you will be overtaken, made redundant, beaten.

FUD Disease in Silicon Valley
Deep sense of insecurity of the so-called FUD - Fear, Uncertainty and Doubt. FUD drives IT entrepreneurs to prove they are really smart and work persistently to achieve perfection. It was so intense that Clash of Titanic Brains happen all the time. Sometimes, so ugly these industrial leaders fought openly as you could see in the article below. Ego fight you could call it. Its known worldwide (at least in the IT and informed people world) that when Apple conceded that they lost the Delta Model War (P3 - Business Analysis) or the format war to WIndows, it has to be compatible to Windows and pay franchise rights to Bill Gates. Guess what? Mr Gates only agreed on one condition - that his arch-rival Mr Steve Jobs personally come to him and apologise admitting that Windows are superior. Some ego.

What do we learn?
Insecurity and endless energy to self-improve should dominate anyone - especially ACCA candidates. As asked in the introductory paragraph above, should you try to catch the FUD Disease?

Lets learn from the IT moguls, billionaires they are, yet they have FUD disease. Some germs are good like yoghurt with acidophilus germs, so this FUD disease is also good.

Don't let others make you feel inferior.
Don't stop in believing yourself. You can PASS ACCA provided you're willing to be Paranoid like what INTEL Boss said. There is nothing wrong to feel insecure like fear of losing your job, fear that you will not pass upcoming exams. Convert this insecurity to powerful energy, let it flow through you. Convert it to works namely spend unbelievable hours in ACCA personal studies. Outrageous amount!

Know this, it drove Apple, Microsoft, Oracle, Google and Facebook to success! Insecurity rooted in FUD Disease is a symptom of SUCCESS! Do you feel that your boss will fire you? Or give you RM30 yearly increment? Or classmates will beat you to graduation? Then transform your life, to achieving the goal - obtain ACCA certificate as passport to take the world by storm.

Tony Fernendaz of Air Asia did it. So did CEO of Tenaga National or MAS or MRCB Berhad. All these started with ACCA qualification and proceeded to take the world by storm.Yes, its a war! Third World War, intellectual war.

Read the following article, and see for yourself, to win you need positive energy, lots of it, to drive you to success. Of course if you can succeed but deduct the egoism seen in these Silicon Valley leaders.

Third world war, it seems, has broken out in an unexpected place: Silicon Valley. Apple and Google were once so close that Eric Schmidt, Google’s boss, joked that they should merge and change their name to AppleGoo. Now, however, the two companies are at loggerheads over everything from apps to acquisitions—and Mr Schmidt and Apple’s boss, Steve Jobs, are taking the fight personally.

Meetings have been “heated” and “confrontational”. The sense of rivalry is “intense”. The two men are treating the world to “an unusually vivid display of enmity and ambition”. One of the Times’ insiders not only likens the squabble to “world war three” but also dubs it “the biggest ego battle in history”. So much for Julius Caesar and Mark Anthony.

The business world has always been a cauldron of personal animosity, and those animosities have been particularly intense in Silicon Valley. Few do grudges quite as well as geeks. Steve Jobs is legendary for his grudge matches. He has been feuding with Bill Gates for decades. He has described Microsoft’s products as “third rate” and complained that the company has “absolutely no taste”. (“I don’t mean that in a small way. I mean that in a big way.”) Apple’s annoying “I’m a Mac” ads are strikingly personal: they pitch a frumpy Bill Gates lookalike against a too-cool-for-school Jobs doppelganger (with added hair).

Mr Jobs has accused Michael Dell of making “un-innovative beige boxes”, for example. And Messrs Gates and Dell have given as good as they have got. Mr Gates once described Apple’s software as nothing more than “warmed-over Unix”. When he was asked what he would do with then-troubled Apple back in 1997, Mr Dell replied that he would shut it down and give the proceeds back to the shareholders.

Silicon Valley is an incubator of animosity for the same reason it is a wellspring of innovation: it is a small world populated by people who want to prove how clever they are. The boundaries between markets are vague and transitory. Companies flit between friendship and enmity. The pace of innovation is so fast that it is difficult to determine who first came up with an idea. (Steve Jobs once responded to the accusation that he had “borrowed” somebody else’s idea with a quote from Pablo Picasso: “Good artists copy, great artists steal.”)

People in the technology industry talk about spreading FUD: Fear, Uncertainty and Doubt. Andy Grove, the former boss of Intel, entitled his autobiography “Only the Paranoid Survive”.

Tech rivals such as Yahoo! and Microsoft have long seen Googlezilla as a calculating predator. The bosses of media and advertising companies worry that Google is destroying their business models, as more and more activity goes online. Rupert Murdoch has complained that it and other online news “aggregators” steal his newspapers’ stories. Apple is rightly worried that Google’s Android phone is aimed directly at its iPhone—and has unleashed its arsenal of legal and commercial weapons to try to keep it at bay.

It is always potentially dangerous when competition bleeds over into personal animosity: judgments can be clouded and strategy distorted. The danger is particularly pronounced with internal grudge-matches. Andersen Consulting and Arthur Andersen spent the 1990s engaged in a distracting matrimonial feud which culminated in an expensive divorce.

Spit and polish
Personal animosity and FUD disease can be the grit in the oyster of competition. Sometimes it can actually create business opportunities: Mr Murdoch’s personal dislike of smug liberals has helped him create a right-of-centre media empire that now includes both Fox News and the Wall Street Journal. Even when vituperation does not drive competition—as is the case in the Google-Apple dust up—it can certainly sharpen it. Mr Jobs’s habit of personalising his commercial rivalry with Microsoft and Dell has honed Apple’s self-image as the coolest company on the block.

Conclusion
Note verbs in article like - unexpected, complain, worry, transitory, vague all negatives rooted in uncertainties that drives these leaders into creating giants today. What a lesson! We too can turn our challenges, problems relate to finance, obligations, conflicts into large positive energy to achieve better, get out of the hole, work relentlessly to achieve it.

Let's shout, "I WILL GRADUATE!" Well, if you did, welcome! There are 168,000 of us worldwide, waiting for you to join the club! Nurture your FUD.

Sources:
Schumper, 2010, The Economist, Look Forward in Anger, March 10
Andrew G, 2001, Only The Paronoid Survives, FT Publisher

FORD'S CROWN JEWEL FOR SALE - VOLVO

- relevant to P3 (BA)

Dear Readers : At the bottom of article , you can rate this article by ticking the boxes if its "FUN" , "INTERESTING" OR "COOL"





When parents face financial distress, rarely they will consider selling their children. But in the commercial world, parent company will not hesistate as seen in Ford selling off its crown jewel (Goold & Campbell framework).

Volvo has rock solid reputation for safety and mid-range luxury appeal. The successful launch of MPVs and SUVs model further enhanced the potential. Its parent, Ford, faced with sudden sharp drop in demand back in USA forced it to restructure ie par down debts and capacity.

Why Malaysian automakers not buying?
In Malaysia, that infamous outdated technology car maker Proton which dominates the local market with 32% or so market share selling 143,000 units last year, surprisingly has not express interest to bid for Volvo. Why not buy? If funding is an issue, really taking a closer look, its not a huge barrier with its SOFP sitting on cash reserves $250million, its NCA is valued at $1.5 billion chargeable to banks and not to forget that it can raise debentures as a listed status. After all, it did manage to pay Mitsubishi Japan Motor amount of $7.3billion over last 25 years in royalty for outdated car engines technology. I am sure Volvo will be a better gain ie to own it.

The simple answer to above is the political paradigm of its major shareholder, the government. It appears that they rather put funding, guarantees for national interests such as fuel subsidies, staple food subsidies and even national defense expenditure like the purchasing of submarine which at one time was non-submersible - teething process, I guess.

This illustrates the folly of government involvement in commerce. The cosy relationship between commerce and government involvement has bred complacency and mediocracy. Well, look at the following article as we see how Chinese carmaker Geely is gayly swooping up this deal.

Ford's selling its crown jewel
Ford Motor Co. Chief Executive Officer Alan Mulally said talks to sell the automaker’s Volvo unit to China’s Zhejiang Geely Holding Group Co. are proceeding, rebutting local media reports the deal could be delayed.

“We are making progress on the negotiations,” Mulally said in an interview in Shanghai, without giving a time frame for when the agreement will be made.

Ford aims to sign a $2 billion deal to sell Volvo Cars to Geely by the end of this month, three people familiar with the talks said last week. Dearborn, Michigan-based Ford put Volvo up for sale in late 2008, part of a strategy of dropping European luxury lines to concentrate on its namesake brand. The China Daily said yesterday financing and technology problems could delay the acquisition, citing people familiar with the matter.

Ford ended three years of losses in 2009 by posting $2.7 billion in net income, its first full-year profit since Mulally came from Boeing Co. in 2006. Mulally has focused on refreshing Ford’s lineup, including adding more fuel-efficient small cars, while cutting costs. He reduced the North American workforce by about 47 percent and sold the Jaguar, Land Rover and Aston Martin luxury brands.

“Whoever buys Volvo, in this case it’s Geely that’s a frontrunner right now, they are gaining a great brand,” Mulally said. “We will continue to support Volvo just like we did with Aston Martin, Jaguar and Tata.”

Asia Growth
Geely, China’s largest private automaker based on 2008 sales, wants to gain insights into Western vehicle development and manufacturing through buying a mainstream European brand.
Mulally, 64, said he sees about 40 percent of global auto sales coming from the Asia-Pacific region over the next 10 years, while 35 percent will be in the European region and 25 percent in the Americas.

“We are going to invest whatever we need to support Asia- Pacific,” Mulally said. “It’s clearly the highest growth market going forward.”

Ford gained U.S. market share last year for the first time since 1995 with new models such as the revamped Taurus sedan, while the predecessors of GM and Chrysler Group LLC reorganized in bankruptcy and received federal aid. Ford surpassed General Motors Co. last month to become the top-selling automaker in the U.S. for the first time since 1998.

Mulally broke ground in September on a $490 million small- car factory in Chongqing, Ford’s third assembly plant in China. Ford ranks 12th in the nation with 2.8 percent of sales, according to auto researcher J.D. Power & Associates. GM, which emerged from bankruptcy July 10, outsells Ford 3-to-1 in the country, building twice as many vehicles.

PS: All currency above are in US$.

DID YOU EARN A PROFIT OF RM9,685.00?

This is my third year blogging with excess of 100 articles. Lots of fun.

I thought why not state my BLOG'S OBJECTIVES? So here goes:
1. To improve candidates' maturity level in understanding ACCA subjects especially at high level

2. To improve candidates' exam practice techniques

3. To encourage and motivate ACCA students in their quests to achieve ACCA Certificate - ie GRADUATE

4. To profit all readers. Useful Stock Market tips, analysis were given. For example, if you take the investment analysis dated August 6, 2008, after less than 20 months, the stock - TSM Global shares shot up by 96.8%. That outperformed the KLCI by >80%. The same period, the KLCI was at 1114 and now was at 1,286 (3 MARCH, 2010) In other words if you [dare] sell your car for say RM10,000 and invest in this stock, you will earn RM19,685.00 before Stock Commission charge.

Now, the extra money is enough to pay for the entire Kasturi Tuition fees for ACCA!!

5. Have humour as Reader's Digest famously say, "Laughter is the Best Medicine."

On profits, look at the re-print from article on Wednesday, August 6, 2008 below:

EXTERNAL STRATEGIC ANALYSIS (WITH FINANCIAL INDICATORS)
ARE YOU REALLY AN ACCOUNTANT?
- Relevant to P3 (ACCA) but not P4 (ACCA)

TABLE 1: TSM GLOBAL BERHAD

SHARE PRICE AS AT 4 AUGUST 2008 : RM 1.27

NET TANGIBLE ASSETS : RM 2.05

MARKET DISCOUNT TO NET ASSETS : 60%

NET CASH POSITION PER SHARE : RM 1.35

PRICE/EARNINGS RATIO : 3.5 times



WORLD'S RICHEST MAN... (con'd) on :-

http://marcusong88.blogspot.com/2008/08/external-strategic-analysis-with.html

So, blogging here is to benefit ACCA candidates and those who strongly believe that ACCA knowledge is powerful and profitable.

Happy reading.
Marcus - Senior Lecturer

NEW F8 EXAMINER - WHY STUDENTS FAIL & HOW TO IMPROVE?

Excerpts: I specialise in Audit (F8, P7), Corporate Relations (P1) and Corporate Strategy (P3) papers. With deep interests in ACCA students' future and success, the the following F8 article is meticulously prepared for your close scrutiny and post-mortem on past students weaknesses. I sincerely hope this is constructive and CHANGEstudents study techniques!

NEW F8 EXAMINER
With effect from June 2010 Pami Bahl will be the new F8 examiner. She has jointly produced the December 2009 exam, hence a ‘NEW’ old look to F8 examination style.

To recap, the introduction of the new syllabus in December 2007 presented the opportunity to amend the style of the ‘old’ 2.6 examination, to allow for the longer scenario and to use reading time more effectively. Originally decided to combine this longer form question with the shorter knowledge questions to ensure that the essential audit knowledge was being examined broadly enough. Pami Bahl testified that there is no plan to change from that format.

Okay, lets cut the chase and analyse F8 students weaknesses.

7 SINS OF F8 EXAM ATTEMPTS: WHY STUDENTS FAIL?

Weakness 01: Confusion on audit procedures
I give 2 examples:
Example A:
Section A of 30% as the bulk testing on 2 distinct audit procedures namely tests of control and substantive procedures. Vast majority of students have the confusion is between tests of control and substantive procedures. Thus incorrect answers in not providing the ‘correct’ type ofaudit test within an answer. Please note this is an area that will be examined very regularly.

Example B:
Many students could identify inherent risks present within the scenario, but most students were unable to explain the EFFECT OF RISK on the audit approach.

What is shocking is an alarming number of students interpret the AUDIT PLANNING (done at the beginning of audit process) question and proceed to describe a full going concern review (done at the end of audit process)!

More worryingly, many students stated that the auditor needs to make ADJUSTMENTS to the financial statements.

Gosh! Auditors HAVEN’T even start their audit process yet, students recommend make adjustments? Based on what? There is no working papers yet!

(for more information Audit Risks-based approach (planning) visit:
http://www.accaglobal.com/pubs/students/publications/student_accountant/archive/sa_may08_pine1.pdf )

Weakness 02 : Confusion on audit process
Going concern audit with repeating audit work on the CURRENT financial statements; this is not the case – going concern relates to the FUTURE.

Weakness 03: Confusion of what is Audit Reports
Audit reports have always proved to be difficult for candidates. More understanding is needed between the different types of reports and when these will be used, report

Students lack understanding on how to apply appropriate qualification wordings with specific emphasis on the difference between uncertainty and disagreement

Weakness 04: Confusion between Analytical Substantive Procedures and Substantive Procedures

Worse yet, as mentioned above, there is main confusion over the difference between tests of controls and substantive procedures. Failure to discriminate between the two types of tests and provided lists containing both effectively will sink the entire question.

This is a surprise in that students knowledge of analytical procedures was relatively weak. candidates had difficulty carrying out basic analytical procedures on financial information.

Weakness 05: Ignoring the case study altogether
common misunderstanding and misinterpretation in case study scenarios such as answers. Please note the case study is a GOLD MINE of information. Pami Bahl mentioned to READ (& understand the facts) the case study. Students should see:
(i) Company has good profits and turnover

And yet

(ii) The management mentioned that this is a difficult year.

Clearly this is an inconsistency, thus Analytical Procedure is appropriate measure rather than Tests of Controls.


Weakness 06: Confusion on question requirements and giving ‘tangent’ answers
Students merely answering a ‘related question’. For example, when a decision is needed on going concern, candidates must have a good understanding of the potential impacts on the audit report and the company.

For example:
The question asked what is the impact on audit report pertaining to Going Concern issue.

Students answer the need to
- Read minutes to meetings
- confirm the directors’ view on going concern
- review interim financial statements
while the above procedures are valid but students still have not answer the “IMPACT” on Audit Report i.e. what are the going concern issues and WHY it affects the Audit report.

Clearly, students lack understanding of exam question requirements. Merely writing what they know only guarantees a low marks.

Weakness 07: Poor practical industrial knowledge
Many students were unable to suggest suitable analytical procedures and offered a variety of SPURIOUS (unrelated) answers

For example:
Do students know that Managers are NOT paid overtime? They are at the senior executive level. So its is wrong to perform Analytical Review to link:
(i) high overtime claims to
(ii) management’ salaries. The overtime claims relate to general factory workers of clocking in procedures.

Neither is this Analytical Procedure accurate:
(i) benchmarking sales personnel salaries to
(ii) industry average

Clearly, sales personnel performance varies individually, thus their salaries PLUS commission varies by WIDE MARGINS!

Care must be taken in reading and understanding the scenario.

HOW TO STUDY F8?

Rule #1: Understand the knowledge.
Students have good knowledge of ISAs inside out – but lacking in what an audit is and how it is carried out. Knowledge will be tested throughout the examination (most notably in question 2).

Some lists, such as assertions, do need to be memorised, but candidates DO NOT need to know which specific ISA these come from. It is much more important in this exam to know why things are there (as in the assertions) rather than to remember the specific paragraph of the ISA they come from.

Rule #2: Understand the REQUIREMENT VERBS
Different approach to questions that have “list out” and “explain”.


Rule #3: Understand the applications to case studies are PARAMOUNT
Knowledge has to be applied to many of the scenarios in the audit and assurance examination. Again, the requirement verb will help, as‘explain’ and ‘discuss’ are trying to elicit more information from the candidate.

For example:
(i) “Application” means finding the relevant points from the scenario
(ii) “Explaining” means the relevance of those points in the answer.

Please read the examiner’s article on this subject from the April 2008 student accountant:

http://www.accaglobal.com/pubs/students/publications/student_accountant/archive/sa_apr08_lewin.pdf

HOW TO IMPROVE F8 PERFORMANCE?
STEP 1: BY GOLLY, PLEASE PLAN BEFORE YOU SPEW OUT THE ANSWERS
Definitely worth spending a few minutes planning the answer.

(i) This is particularly true of question 1, where there is a substantial scenario to read.

(ii) Use the requirement verbs intelligently to visualise the answer –‘explain’ with a scenario means two marks per point, one for the point in the scenario and one to show why the point is relevant. Say, 12 mark question therefore needs up to six full points to obtain full marks.

(iii) Candidates should make sure they read the scenario properly and apply it to make sure they pick up the required number of points.

I recommend that your plan can be WRITTEN FORMALLY on the answer book, jotted down on the question paper or even be a list of points in your head – the important thing is to plan in the method that best suits you.

Step 2: By JOLLY, please think!
No intention to be cheeky here. I am serious! Students tend to ‘vomit’ out textbook, lecture notes materials!

Please try to think to make sure the reason for each point being relevant is clear. In other words, just step back a little from the plan and make sure you can explain the points – or at least prioritize them into some form of order so that the ‘best’ ones are given first. This will maximise your chances of obtaining marks in the examination.

Step 3: By Dolly, you need to practice writing out the planned answer in full
Unfortunately, too many skip my tests and assignments candidates, thus poorly equipped with too little exam practice before entering the exam hall.

You can NEVER learn how to swim, if you don’t practice,
You can NEVER learn how to drive, if you don’t practice,
You can NEVER learn how to cook, if you don’t practice,
You can NEVER learn how to pass, if you don’t practice F8!

MY OFFER
Attend my class in Kasturi School of Accountancy (Kuala Lumpur) to learn:
i) Avoid 7 deadly sins in F8
ii) Practice exam techniques
iii) Hopefully, as many testified they did, enjoy learning in my class

Hurry, place is not limited but time is!

In other words, learn Pami Bahl examination style and pass. Understand this lady’s forte and why her accounting experience in Price Waterhouse, Coopers &Lybrand, also as a freelance lecturer has a distinct specific style in testing F8 candidates.

How to register?
Visit : http://www.ksacitycampus.com/
- for time table
- for fees
- for location map

Useful articles:
1. Verbs in Questions:
http://www.accaglobal.com/pubs/students/publications/student_accountant/archive/sa_apr08_lewin.pdf

2. Audit Planning:
http://www.accaglobal.com/pubs/students/publications/student_accountant/archive/sa_may08_pine1.pdf

Best wishes.
Marcus Ong – Senior Lecturer

BEST WISHES Over Your Exam Results

Motivating and maximising the potential of every
ACCA student in Kasturi College International.


Results are out today:
= be courageous
= be mature
= be rational
= be a "wei Ji" (mandarin) every crisis there is an opportunity. Seek OPPORTUNITIES out of problems. Change your strategy in studies, change lecturers & college (if you must) and NEVER NEVER QUIT.

You know how it is...students know they should study, but they don't hard enough or got the wrong study techniques.

Why's that?
1. Well, you wouldn't get into a taxi unless you knew your destination.....
2. Equally, you wouldn't run a race unless you knew where the finish was!

------ "What's the point of working hard at school unless you know why?"------
------ "Let's face it, nobody does anything unless there's a reason WHY!"------

The life-changing stuff we do inspires and motivates students to find their reason 'WHY'. It's called 'The Big Picture'!

"Students don't want education, they just want the results they get from it. As an ACCA Lecturer of more than 13 years, my mission is to get you to want BOTH!"
Successful students is YOU if:

1.Are quietly 'getting on'. Yes, you needn't be the most popular in class but be popularly known to ask and probe your classmates on technical studies difficulties.

2.Get better exam results, which Kasturi College International has a very competent team of lecturers like:

* Andrew Pang (F5, F9, P4 & P5),
* Dr Parminder (P1 & P3),
* Tax practitioner expert Alan Yeo (P6),
* Marcus (F8, P1, P3, P7),
* Sanjeetha (Lawyer by discipline for F4)

* I think the most experience and si-fu (master) of Consol. Accounts - Keith Farmer (F7 & P2).

We have combined experience in "specifically" teaching ACCA
for over 100 years! By that standard that is the the most experience team in MALAYSIA!

3.Have a greater sense of urgency. Time is money, there is little time to waste for its your future at risk!

4.With support from both lecturers or (enduring) parents, equipped yourself with vital qualities of discipline, industriousness and perseverance.

5.Ask more questions and listen more attentively in class which is only possible if you are in smallish class.

6.Make better judgements about campus life, social life, personal relationship life (yes, boyfriend & girlfriend stuff) i.e. KNOWING how to balance Life and Student responsibility as an ACCA under-graduate.

7.Statistics from ACCA has shown that re-sit students have a HIGHER fail rate in their next exam attempt compared to first timer. Lecturers in Kasturi College International are renown for helping these students segment and they PASS! Naturally, if you can help the more challenging segment of students to pass, the first-timer students will benefit even more immensely as this means they can score high marks. High marks give you a "Margin of safety" (Warren Buffet, 2001) and builds stronger foundation to pass the P-Level.


Why don't quit?
=Education provides HIGH INCOME opportunity.
=Education provides better living standards for the job market is NEVER discriminatory over race, nationality but over COMPETENCE & QUALIFICATION!
=Remember the late premier of China, Mr Mao said,

--"It doesn't matter if the cat is black or white, so long as it catches the mice!"--


ACCA success in Kasturi College International offers you a career with international career opportunities - Hong Kong, Melbourne, Shanghai, New York (if you have Oxford Brookes Degree too), London and the list excitingly goes on.

BEST WISHES over your Exam Results.

Marcus Ong - Lecturer

Please visit Kasturi College AT http://www.ksacitycampus.com/ for enquiries on in:
= PETALING JAYA CENTRE
= KUALA LUMPUR CENTRE

OilCorp, Ho Hup & EON Bank: Corporate Governance Works!

- relevant to F8, P1 and P7 and
...not forgetting our uncles & aunties who like to invest in Stock Market.

2 years ago, I have a wonderful time discussing with F8 students in a certain college in Petaling Jaya about the corporate governance dilemma. With Malaysia adopting the UK Combined Code governance, I am of the opinion that its superior to other countries governance particularry the Germans and Japanese.

I recall in that class mentioning that its 'fishy' for OilCorp directors to insist (over) valuation of Plant by RM10million. (See article on http://marcusong88.blogspot.com/2008/08/auditors-appointment-professional.html). Then the directors use Horwath AUditor to pit against the opinions of BTMH Auditors. As an investor, I tend to side the current Auditors - BTMH, as they have ethical advantage of being independent.

Why go against your auditors? Bear in mind, OilCorp Directors have an earlier accounting dispute on valuations. They relented by writing off RM20 million or so from CIS. A blow to shareholders but at least that is true and fair opinion. SHouldn't directors be focused on Corporate Strategy? Rather than accounting disputes?

Something got to cave in, and in this case, very likely the ill-informed sharholders who stayed invested. Worse off are the long term investors.

True enough, after 2 years, the current Directors integrity was really questionable and its lack of competence has noise dived Oilcorp Bhd to state of insolvency with Bursa Malaysia Exchange designating it with a PN17 status. Shares price of 2 years ago was at about RM2.00 pee share and now its at a fraction. Read the following article from the Governance Watchdog CEO. A good background knowledge for F8, P1 and P7 of the ACCA.

Other Companies with questionable governance:

Ho Hup Berhad Berhad
There are other similar OilCorp Bhd poor governance. The latest being Ho Hup Berhad. Information is powerful, ladies and gentlemen. IF you have uncles, aunties, cousins and friends invested in this company, tell them to bail out. The Board of Ho Hup is in a tussle which usually leads to the disadvantage of minority shareholders.

EON Bank Berhad
I will stay away from EON Bank Berhad too. TO recall, Hong Leong Boss, Tan Sri Quek Leng Chan, offered to purchase EON for RM9.42 Billion or RM7.10 per share. EON bank's major shareholders, Rin Kin Mei and Tan Sri Liong, who collectively controls 32% could with another 18.1% other shareholders vote to approve the sales. This means the remaining 49.9% minority shareholders are 'forced' to sell. This includes Primus Pacific Partners which "only" controls 20.2% at purchase cost price of RM9.55 per share is forced to sell too. Now that is unfair!

By the way, have a happy constructive holiday i.e. please do my assignments!


Article by CEO of Minority Shareholder Watchdog Group on Oil Corp Berhad:

Board needs to prevent another accounting issue

BARELY two years after its reported accounting issue, Oilcorp Bhd is once again in the limelight after announcing it had become an affected issuer under PN17 status.

News coverage of this nature has been both astonishing and depressing for shareholders and investors alike.

Financially, the company is in a difficult cash flow situation, which is attributable to its inability to collect outstanding large receivables on time.

On Sept 18, 2009, Oilcorp announced its default on an interest payment of RM1.6mil while two of its independent, non-executive directors resigned.

The situation has raised a myriad of concerns which the board needs to address fast and convincingly in the interest of all stakeholders.

From the time of its reported accounting issue and the delay by the board to publish its annual report for the year ended Dec 31, 2007, it is now perhaps time for the directors to assess the situation clearly and explain exactly what had gone wrong and to restore investor confidence as best they can.

The board’s announcement on Sept 23 does not provide sufficient information regarding the matter.

As at Dec 31, 2008, the group’s receivables stood at RM474.98mil (audited), of which about RM130.34mil was due from Plant Biofuels Corp Sdn Bhd and Optimis Teguh Sdn Bhd.

Oilcorp’s EGM on July 20 obtained shareholders’ approval for the proposed subscription of 2,211,166 new convertible preferred stocks of US$0.0001 each in Renewable Fuel Corp (RFC) at a proposed issue price of US$10 per preferred stock.

This will be be satisfied by conversion of the aggregate debts of about RM80mil, owed by RFC’s two principal subsidiaries, Plant Biofuels and Optimis Teguh.

RFC is expected to make its submission around this year for listing and trading of its shares.

It is not enough for shareholders just to know the progress of RFC’s submission at this juncture. What is required now is for the board to provide information on the status of collectibility of the group’s large receivables outstanding at RM489.68mil (unaudited) since the board’s announcement on Aug 27 of its second-quarterly results ended June 30.

It is worth noting that the share prices had plummeted from the closing price of 31.5 sen on Sept 18 to 19 sen on Sept 24 upon the announcement of the company’s default in loan interest payment, followed by its announcement of PN17 status.

The key word here in Oilcorp’s dilemma as an affected issuer under PN17 status is the need for transparency and accountability for disclosure of material information. This responsibility falls with the board, especially the audit committee.

But how will the audit committee function now when currently there is only one independent, non-executive director on the board after the resignation of its two other independent non-executive directors.

Given Oilcorp’s PN17 status, how soon will the board be able to regularise the company’s financial condition?

Within three months of the first announcement, the board has to announce whether its regularisation plan will result in a significant change in the company’s business direction or policy even though 12 months are given to submit this plan.

The board needs to consider sending out timely information to meet all these expectations. In a PN17 status, it is crucial for shareholders to know what the board is doing to address the problems faced by the company.

The directors would still have to uphold the principles that undergird rules to get things done right. This brings directors clearly to the central tenets of good corporate governance practice.

In fairness to shareholders and stakeholders, the board needs to assure trust, prevent a repeat of another accounting issue and avoid surprises to shareholders and investors.


Source:
● Rita Benoy Bushon, 2010, CEO of the Minority Shareholder Watchdog Group.

Can Malaysia “TIGER” economy catch up? (Part II)

Yes, Malaysian has a 'lost decade' of the 21st century'. Wasteful subsidies, flip-flop government policies, noisy but ineffective opposition political parties, bureacratic federal government are all that scared off investors. These are main concerns to Malaysia's lagging economy.

Stop for a while and think, why would Resort World Berhad invest over RM13 billion in Singapore to build competing Casino? Isn't Singapore currency strong and expensive, with small captive population? A simple answer is Singapore has morphed albeit evolutionarily to become the best place to do business in Asia. NOte they are ranked the 5th least corrupt nation in the World! As for Malaysia, it was 56 in 2009!Worse ranking than gangster land Macau at 43! Or Brunei at 39, Chile at 25.

The emphasis is not how much FDI Malaysia should attract, but how it creates a conducive risk taking business environment for entrepreneurs to thrive.

Re-position mindset to attract Foreign Direct Investments
Malaysia lagged behind in terms of FDI and technological transfer. We may not get the numbers which generates employment, land utilisation and income. Why not break away from the mindset that we need billions of investment dollars?

Create Malaysia as the best place in South Asia to do business by promoting:

1. Inquisitive and risk taking culture in our universities. Imagine how much start up capital you think Google, Facebook, Intel and Motorola need? Was it not ideas that generate business. To be specific, entrepreneurship is about identifying gaps of latent demand neglected by incumbents rivals or to create a new demand as Nokia did in popularising need to have handphones in almost everyone’s pocket or American Express Card of need to pay by credit albeir stylishly and of course Swiss Watch makers with the redundant over-priced wrists band watch (we can see the time on our handphones, right?)

2. Consistent governance and legislation that fair and corruption free. (I think there are already many articles on this. You should read them yourself. They Malaysiakini.com or RPK's creation - http://www.malaysia-today.net/)

3. Immigration laws that encourages hassle free stay in our land. True, we need to be selective to the choice of skilled labour we prefer as did Australia who recently identified skilled workers in healthcare, engineering and mining are much welcome. 200,000 other application deposits are refunded and politely rejected.

4. Promote accountability at State, Federal and Council levels through election. This encourages transparency on how public funds are utilised. Bear in mind that Selangor state is the single largest consumer in the country with expenditure exceeding RM4.1billion (US$1.2billon).

5. Involve the royal family whom we appreciate has been playing the pivotal role of symbol of stability and head of the military. The Yang Dipertuan Agong, being above the court laws, which means His Majesty cannot be tried in court can exercise his judgement and wisdom to investigate, intervene and improve the current governance. Much issues seemed left open like the investigation of Port Klang Free Zone scandal, theft of military weapons and over-collection of tol when Tol Operators like Mulpha Berhad (MCA affliated) company continued to collect tol passed their deadline for 10 whole years. No one at Directors' Senior level or with fiduciary duty to stakeholders was charged, thusfar.

6. Create Business-centric culture. Datuk Musa Hitam said, business is never racists with its indiscriminate desire to please the customers. If Malaysian entrepreneurs are not ambitious besides Air Asia and CIMB, both are true regional players and Petronas the only true Malaysian global player, then why not invite Facebook-type of people to do business in the country? United States has no problems with 30% of its population are migrant professionals. In fact in Silicone Valley, more than 50% of its Information Technology R&D workers are foreigners. Can we offer 200,000 Visa pass to India’s top pharmaceutical and software engineers to stay in our land? Prime Minister Datuk Seri Najib confirmed our worst fear, a brain drain of up to 500,000 skilled Malaysians are stationed overseas. At that rate, we will go from Brain Drain to Brain Dead, in view of our already tinish population.

7. Exploit Malaysia’s own niche of competitivenes. Can we not strategically capitalise on strengths? Malaysia’s connectivity to the Middle East and leadership in Islamic finance puts it in a prime position to attract petro-dollar investments into Asean yet why is Singapore talking about becoming an Islamic finance hub? Singapore is already the region’s leading international financial centre. Does Malaysia need to spend to attract international fund managers? Thailand has a hugely successful auto industry. Shouldn’t Malaysia’s Proton move there?

8. Opposition PKR (Pakatan Rakyat) apparent failure - A Good Thing
The fall outs within the parties actually is a testimony of strong governance. PKR leaders have positive quarrels that forces the coalition to seek solutions and compromises. Issues weren't swept under the carpet. This is an informal culture of 'whistle blowing' system. A superior governance! However, they need to set up Risks committees focusing on implementation strategies. Then investors can see the value of investing in States of greater accountability.

Conclusion
The Japanese emerged as richest nation in Asia after a horrible defeat in World War II. It took them only 50 years to achieve that compared to Americans of 200 years. The key factor is human spirit and determination. Malaysians are smart, highly intelligent and industrious. Can it catch up? The future really is in your own hand.


Sources :
• Bernama, 2010, Malaysians hit as Australia tightens immigration policy
http://www.theedgemalaysia.com/political-news/159310-malaysians-hit-as-australia-tightens-immmigration-policy.html, 08 February

• Datuk Seri Nazir Razak, 2010, Speech in Thailand Management Association Top Talk on Feb 3, 2010.

• Mahani Zainal Abidin , 2010, What political and demographic challenges will face Asia Pacific? http://www.isis.org.my/attachments/559_MZA%20APC%20Sydney%2004Dec09.pdf, visited on 10th February.

• Syed Jaymal Zahiid, 2009, Budget 2010: Easy PR status for skilled expats , http://www.themalaysianinsider.com/index.php/malaysia/41250-easy-pr-status-for-skilled-expats, Oct 23

• The Reuters, 2010, Swatch Profits beat forecast, http://biz.thestar.com.my/news/story.asp?file=/2010/2/10/business/5646983&sec=business, 10th February.