| The Lean and Mean Machine Pte Ltd Copyright © 2009 Income Statement | August 2009 |
| Total | |
| Interest Income | - |
| Dividend Income | - |
| Net gain on quoted disposal of investments | - |
| Revenue | 2,273.28 |
| Less: Operating Expenses | |
| Food | 582.15 |
| House rent | 330.00 |
| Fuel | 156.38 |
| Parking | 156.00 |
| Electricity Bill | 55.40 |
| Internet Bill | 55.00 |
| Futsal | 27.00 |
| Investment Fees | 44.69 |
| Others | 295.60 |
| Profit before tax | 571.06 |
| Income tax expense | - |
| Profit after tax | 571.06 |
| Net Income | 571.06 |
| Basic Earnings Per Share | 0.0714 |
| Net Profit Margin | 25.12% |
| Return on Equity | 6.66% |
| NAV per share | 1.0122 |
Monday, August 31, 2009
The Lean and Mean Machine Pte Ltd Monthly Income Statement August 2009
Sunday, August 30, 2009
Economics @ Home © Volume 1 Issue 6
This weekend is Merdeka Weekend. I thought about writing a special issue for Merdeka Day but then I realized that I don't really do anything special on Merdeka Day. For those of you who don't know what it means, Merdeka Day is the independence day for Malaysia. Most of the time, I end up playing in a chess tournament in conjunction with the festivities and I get to meet my friends from all over Malaysia. I really looked forward to this even when I was much younger. I am still going to be playing chess this weekend. Perhaps I do not look forward towards this event with the same earnest, partly because so many things have changed since the days that my friends and I used to dominate this tournament. Ever since they opened it for the whole of world and introduced a bunch of funky rules, coupled with the fact that players that I played with are mostly more focused on work right now (including myself), it is indeed difficult to find the same enthusiasm that once made me wait the whole year for this event.
Nostalgia aside, there are many different meanings of independence to this country. One of the most common reasons that Malaysians celebrate this day is that this country obtained its independence from its British oppressors in 1957. While that was the reason 31 August is commemorated each year, the reason that most Malaysians celebrate Merdeka is probably because it is simply a holiday. People don't have to go to work, there is no need to "struggle", no need to plod, no stress, and people can just have some "leisure" time to themselves. Regardless of the reasons people celebrate this 31st August, I would like to indulge in some of the reasons why we should not be celebrating.
This is not an attempt to be a party-pooper but I simply find it difficult to shut out the glaring deficiencies in this country while pretending to be thankful for 52 years of "peace and harmony". While we have been absolved from the grips of the British, for the most of the past 52 years, we were bound by an even stronger but more subtle oppressor. Like always, I will steer clear from politics because I do not pretend to know how to run a country. My job as an economist is only to analyze the costs and benefits of any issue that I deem interesting. Anyone can point out the flaws of any government and the simple rebuttal of "nobody is perfect" speech by the government can hardly be refuted. Mostly because no one is ever given a chance to refute this. This is what I mean by the subtle oppression that we face. It is redundant to scream for the freedom of speech and what not. Thanks to the internet, I am able to share my views with you today. But my readership is ever so limited. What can one expect after six volumes, right?
The goal of this issue is to discuss this attitude of "nobody is perfect". I assert (just like all great economists do when they begin an argument) that this is a result of plain complacency. I keep reading about the anger of the people who demand such and such from the government and I cannot help but share their anger. It is too easy to notice the sad deficiencies that our country faces, but the important issue is why we cannot escape our miserable fate? The government and some people keep preaching about how lucky our country is. I remember back when I was in Form 1 that my history and geography teachers taught me that Malaysia is a lucky country because of our natural advantages. We are shielded from earthquakes, tsunamis (except for that unfortunate day in Penang), volcanoes and what not while enjoying the advantage of having THE trade route that links the West and the East in the form of the Straits of Malacca.
After the British left, we were left with the same advantages. Our economy grew rapidly despite the falling out with Singapore, courtesy of the vision of our first Prime Minister, Tunku Abdul Rahman. Why did we advance so rapidly and what happened after that? After being "freed" from the British, Malaysia was hungry. We have been hungry for a long time but we were leashed down by an oppressive nation. Malaysia rose as one of the five tiger economies. However, if we look back over the past forty years and compare ourselves with the likes of Singapore and Thailand, the flame that was claimed to be Malaysia's just seems to be fizzling out like a dying ember. What happened?
As I said before, the problem is complacency. For the past few decades, our country has basked in the doldrums resulted from self-content. There is no need to say that while Malaysia and Singapore are about the same age, the difference in the maturity of our economic strengths are astronomical. The national income per capita of Singapore has grown to at least three times that of Malaysia since our independence. That is without accounting for the handicap in terms of the lack of natural resources that Singapore had. We often hear that Singapore is a smaller country and this made it easier for them to advance. They have fewer mouths to feed, thus having more resources to focus on growth. We simply forgot that they have no natural resources at all. Well, at least not those that can be harvested from the Earth. They simply harvested the most valuable natural resource of all: human capital. On the other hand, Malaysia rested on its laurels of being "the best" in the region. We were ONCE the largest rubber exporter. We were ONCE the largest palm oil exporter. We were ONCE the largest exporter of semiconductors. We were number one in the world. They still tell us that in our history books. Then after that, as years go by, we decided we should fish in a smaller pond and became number one in South East Asia and then number one in whatever smaller region you can think of.
After the 1997/1998 Asian Financial Crisis, we almost chuckled at Thailand because of its financial meltdown. We again looked upon lesser foes and crowned ourselves champions of the weak. A little known fact is that the national income per capita of Thailand has overtaken that of Malaysia assuming we had started off from the same base since 1970. Who is having the last laugh now? Not us, for sure. Forget about Thailand. Let's laugh at Indonesia because they can't even keep the bombers from blowing up their own people. Guess what? If you study the growth in the national income per capita of Indonesia, you will notice that Indonesia is gradually catching up to Malaysia ever since Bambang Susilo Yudhoyono, was elected president in 2004. Before long, maybe Malaysians will be sent to Indonesia as maids. Scary thought isn't it?
What are we champions of next? Oh wait, what about Laos, or Vietnam, or Cambodia? We are still better than them. Are we? 52 years ago, we celebrated our independence with the hunger of an unfed tiger. Today, our government has indeed satisfied that hunger. We have kept them well-fed. March 2008 served as a wake-up call for these satiated monsters and we can only hope that the same hunger of the sixties is rediscovered. Or do we leave it to hope?
I can only hope that I will never be stuck in this rut of a complacency that I was once guilty of. Indeed I basked in the doldrums of self-content. Today, I repeat to myself everyday, the grand message that Master Steve Jobs passed to me, "Stay Hungry, Stay Foolish". Maybe one day, I will truly stay hungry and foolish and be proud of it.
Sunday, August 23, 2009
Economics @ Home © Volume 1 Issue 5
Economics of Brutal Honesty
Remember the time when we were young and we were told never to tell lies? “Honesty is the best policy”. Once we got older, not only did we learn to lie but we also became masters of deception. The power of reasoning was bestowed upon humans. Because of this, not only are humans able to weigh the costs and benefits of lying, but are also able to justify their deception. This issue explores the incentives for dishonesty and whether honesty really is the best policy.
First of all, many people will argue that concealing the truth does not tantamount to lying. That is to say that silence over some relevant issue is not equivalent to lying, which is often defined as disclosing information that is contrary to actual facts. I assert that nondisclosure is within the class of falsification or lying. Saying that it isn’t a lie is merely the justification of the lie that is a consequence of human reason. Before you become defensive, let me first clarify that I do not pretend to be a moral judge. I don’t care if it’s OK for you to lie. Whether or not it is “right” or “wrong” to lie about something is dependent on what “right” or “wrong” really is. That debate will be left for theologists and philosophers because those issues are not really relevant and their accurate definitions are unnecessary for our topic of interest.
The second incentive is closely related to the first. People lie for their own gains. Survival and protection is merely a subclass of one’s personal gains. Other common gains come in various shapes and sizes: money, power, pleasure and happiness, just to name a few. With so many incentives that can grant almost infinite utility (satisfaction) with relatively little personal cost, shouldn’t the real question be, “Why not lie?”. Once again, we have to look at the bigger picture. Cost-benefit on a personal basis would logically lead one to lie. However, many real life situations that involve lying are zero-sum in nature. That is to say, one man’s gain is another man’s loss. On a larger scale, not all situations are zero-sum. In fact, most scenarios have positive externalities when honesty is applied. Nonetheless, this would require one to actually consider the costs and benefit of a larger group as a whole, which is very often not the case. Our primal instincts tell us to look out for ourselves and our “own kind” (family, closed ones etc.). Fortunately we are not all animals.
Recently, I read a quote from Khir Toyo that made me laugh. The comment was referring to the mysterious letter that was handed to Gobind Singh that implicated several top officials and politicians, including Khir Toyo. This letter was published on many blogs and other online sources. I will not post the letter here because this is not my fight and I tend to get very emotional when I discuss cases like these. This was extracted from the Star:
Meanwhile, when contacted, the politician (referring to Khir Toyo), who was overseas, said the allegations were baseless. “I have nothing to gain by toppling the Selangor government,” he added.
“I don’t think it’s the work of MACC officers. What are they going to get by making such wild allegations?” he asked.
At first, you may not find it as funny as I did. But let me point you in the right direction. It was not because I think he was lying, but because of the reason he gave: “What are they going to get by making such wild allegations?”
This is so typical of a pig who only knows how to think of himself. He thinks that everything that everyone does is for self-gain. Maybe on an individual basis, the authors of the letter would gain nothing. However, to expose a corrupt fraud and pig of an ex-government official in a country that is trying to stem corruption from the core is a huge gain for the people of the country.
Let’s backtrack a little. Before this he said: “I have nothing to gain by toppling the Selangor government”. Once again, talks about self-gain. Clearly, a man who only looks out for himself. If only investigative journalism was more mature in Malaysia and reporters were given the free reign to report facts. A pig would never be able to hide under a man’s clothing. Of course I have no evidence to claim that Khir Toyo was lying when he said that. However, any being of at least miniscule intelligence can tell that there is everything to gain for an ex-Mentri Besar of Selangor to topple the current Selangor government. After all, he is the one who is living in a house that is allegedly worth RM 24 million.
Furthermore, theoretically, a politician should have an inherent desire to serve the public. If he still believes in such things, there should not be any talk about self-gain in trying to win his old position back. Do it for the people. Or maybe he thinks that the current Selangor government is doing a great job for the people. Maybe that’s why there is no reason to topple them. I guess I did venture a little too far into politics. Told you I’d get emotional.
Back to economics. There are many countless examples of people lying for self-gain. One can easily point to Bernie Madoff and his USD 65 billion scam. With the incentives of lying so tempting, can we really blame people for lying? Is honesty really the best policy? After all, these liars are behaving merely like the Homo economicus that we assume people to be in our study of economics.
If only we were Homo economicus, then we would have all the right reasons to lie. We are Homo sapiens. Some of you do not need to be reminded of that. However, it is not too uncommon that sometimes Sus barbatus forget what they are.
I would like to remind everyone that cost-benefit analysis must never be abused. While it is easy to see the infinite gains for oneself when practicing deception, it would be nice to think of the costs and benefits of everyone that is affected by our decisions. More often than not, the benefits enjoyed by the group far surpasses the cost to ourselves. That is why we call it the greater good. That is the world that I hope my children will get to live in. A world that prioritizes the greater good.
Sunday, August 16, 2009
Economics @ Home © Volume 1 Issue 4
Where is my money?
How many times have you asked yourself that question, or some other similar version of it? Waking up at 7.30 a.m. to go to work and returning past dinnertime every weekday just to keep your family fed. As Monday begins, you look forward to Friday, AGAIN. Some of you even dread Sundays because tomorrow is Monday. Weekends are a whole lot of fun because you get to watch TV, hang out with friends, or do whatever it is that you do. To make things worse, after all that, when you receive your paycheck at the end of the month, you feel only two seconds of joy as it dawns upon you that you have to pay your rent, your bills (electricity, telephone, internet, handphone and god knows what else), your wife (for her to buy groceries and necessities for your family because she quit her job to take care of your children; you refused to hire a maid because you want the best environment for your children) and the list goes on. By the time you subtract all these expenses, you are afraid to even look at the balance that remains. Maybe that’s why you don’t keep account of your expenditure. Does the above sound like you? Granted, most of my readers have not had a family yet but I hope the story is something you can relate to.
Don’t misunderstand me. I am not saying that you are struggling to make ends meet, but I believe that you wish you had more money at the end of every month. There is a reason why I keep referring to “you” throughout the introduction above. If you feel belittled or angry or even better, you said to yourself, “That’s definitely not me”, then you have even more reason to read this issue.
The purpose of this issue is to raise awareness regarding personal finance. Though I do not claim to be an expert on multiplying my money or earning millions, I feel it is important to know how to be prudent. I am talking about that date you had with your girlfriend last Saturday that cost almost RM200, the clubbing nights you had with your girlfriends on Friday and Saturday, that extra haircut you had last week because you suddenly decided that a straight fringe does not look good on you. I am almost certain that at that point in time, you had a dilemma whether to spend that extra money or not. It wasn’t that you couldn’t afford it, but it definitely is a decent proportion of your monthly income. That is to say, I don’t think you are not prudent. In fact, you showed great persuasiveness and reasoning skills to the extent you convinced yourself that you are either doing it for love, or because it is a once in a blue moon kind of thing and not purchasing spontaneously. I am not going to judge your spending habits but one thing is for sure, these expenditures add up and very quickly at that.
I have not even gone into the fact that women (more mature form of “girls”, which was actually my first word choice referring to the female human species) shop for clothes, shoes, makeup and all the other ego-enhancing doodads that sometimes make them appear more glamorous and aesthetically pleasing than they actually would be (or in some cases, less). What about the manicures, pedicures, spa sessions and gym memberships, yoga classes and pilates? At the end of the month, you often ask, “Where is my money?”.
Where is your money, indeed. The only way we can ascertain exactly where all the money went to is to prepare a simplified income statement or cashflow projection that I showed two issues ago (refer to Volume 1 Issue 2: The Lean and Mean Machine Pte Ltd). Once you figure out where your money goes, the next step is to list those spending down in order of priority. Some people rate shopping above food, so… I don’t know what your list would look like. Now start from the bottom up and ask yourself two questions? First, “Is this expenditure necessary?”. Second, “By how much can I reduce this expenditure?”
Of course, cashflow projections are meant to be taken seriously. I recommend a 10% decrease on unnecessary items such as shopping, eating at restaurants and things like that. Try that for a month. It takes a lot of discipline and self-control. So to help you, you should visualize a goal that, something that you really wish you could do or have, be it a trip to Paris, or an iPhone, or your favourite LV bag, if you had enough money (by which I assume you currently do not have enough). With this goal in mind, every month you manage to save a proportion of your projected expenditure would seem like a huge step closer to attaining this big dream of yours. This is how you are going to get what you want. That is of course assuming that is the point of asking “Where is my money?” to begin with. There must be something that you want.
Just to switch gears a little, I would like to address a slightly larger perspective. On a macro scale of things, many of you who have existed in the past ten years or so would have heard about our fourth and fifth Prime Ministers who don the fancy Egyptian crowns and declare themselves Pharaohs, building their pyramids and monoliths. What am I talking about? I am talking about the Mega Project era of Malaysia, the dark times when projects of galactic proportions mushroomed throughout our country.
Let’s visit a few, in case you’re struggling to think of any. The most notable one would be our local favourite Petronas Twin Towers, which cost about RM1.8 billion. In a news article, Mahathir was quoted as saying that a country needs “something to look up to”. With a building of that height, there is no surprise that we have to look up to get a full view of it. Not only did the towers cost a fortune, it was built right smack in the middle of KL, the jammestest city in Malaysia, even worse than Sydney, a city with a much larger population than KL. More offices in the city means more people have to travel to the city to work. The debate about all the man-hours (and woman-hours) lost each year due to traffic jam is almost disgusting and will be left for discussion on another day.
Second, how many of you have heard of Putrajaya? Now, how many of you actually know where it is? If I did an actual poll among Malaysians, my guess is many of us don’t even know where Putrajaya really is. But guess what? The administrative capital that is actually in the middle of nowhere cost RM5.26 billion to construct. Among the buildings there is the “Prime Minister’s Palace”.
Third on the list is Malaysia’s favourite racing circuit, the Sepang F1 track (other than the streets of KL). At least one can say that street racing has been curbed to a large extent, no thanks to the 300 bumps that were laid across each straight road. One only has to visit the housing area of SS2 to see that 300 is probably not an exaggeration. The F1 track that was built, again, in the middle of nowhere cost taxpayers about RM75 million, a midget figure compared to the previous two projects.
Lo and behold, the fourth superstar, the KL International Airport. The airport is another one of the super projects that was located “a stone’s throw” from the city as publicized by the media. It only requires one to drive about 45 minutes to the airport for a 40-minute flight to Singapore. The airport cost about RM2.36 billion. To makes things worse, the airport was so seldom utilized that the government had to force all international flights to go through KLIA to maintain its A grade rating. In the past, Japanese tourists frequented Penang because of the direct flight that was available from Narita, Tokyo to Penang. This option is no longer available as one has to go through KLIA now. The Japanese no longer visit Penang and the tourism in Penang has suffered tremendously because of this.
Even more recently, any newspaper reader would be aware of the PKFZ scandal in which Kuala Dimensi Sdn Bhd was alleged to have overbilled the government close to about RM1 billion for the development of Port Klang Free Zone. Of course, the exorbitant expenditure works both ways as the overbilling was not questioned at that time and the government overpaid KDSB, or did they? Nonetheless, with its political twists and turns, the scandal is far from being settled and one can only hope that the case will not be buried six feet under once again just like the many high-profile scandals that have occurred in the past. I must be cautious not to misquote anyone or throw any names to avoid being pulled from my comfortable armchair by the ISA. Who is going to stage a demonstration for an unknown person like me to get me out?
I do not have to total up the billions that were spent on these mega projects to tell you that you are not alone when you ask, “Where is my money?”.
It would be too harsh to equate oneself with the excessive spending of the government but the idea is similar. We spend and we spend on things that we may or may not need and pay a price that sometimes far surpasses the intrinsic value of our purchases. To put it simply, we are paying RM10 for the new RM9 note, just because its unique or some other funky reason. Would you pay RM10 for an RM9 note? If we try our best to live life practicing strict valuation on our purchases as well as good cashflow planning, hopefully we would never have to pay more for something than what it is actually worth. So for those of you who have asked yourselves, “Where is my money?” it is about time to wake up and smell the coffee or roses or whatever it is that you want to smell. Start taking control of your money and don’t let your money control you.
Where is my money, indeed...
Sunday, August 09, 2009
Economics @ Home © Volume 1 Issue 3
Monday, August 03, 2009
The Lean and Mean Machine Pte Ltd
Sunday, August 02, 2009
Economics @ Home © Volume 1 Issue 2