BANK NEGARA INTEREST REVIEW ONLY BENEFITS THE BANK

PROTON EDAR DEALERS ASSOCIATION MALAYSIA

Press Release

“INTEREST RATE REDUCTION WILL ONLY BENEFIT BANKS”.

JANUARY 2009, KUALA LUMPUR. The downward revision in the Bank’s lending and base financing rates will have negligible effect on Proton car sales” said Armin Baniaz Pahamin, Acting President, Proton Edar Dealers Association Malaysia.

1. Currently, the interest rate for Proton car remained at 3.88% for hire-purchase loan duration of 7 years or less and 3.99% for hire-purchase loan duration of 8 and 9 years.

2. The interest rate has remained constant and there is no downward adjustment for Proton car interest rates even after the last revision by Bank Negara in November 2008.

3. In the latest revision by Bank Negara, it is doubtful that any interest rate adjustment to be made to new proton cars and on the bank facilities subscribed by Proton dealers.

4. Similarly, there is no interest rate adjustment even on Bank facilities subscribed by Proton Edar dealers (with most banks) during last November Bank Negara revision.

5. The interest rate for banking facilities offered to proton dealers by most banks is on a fix interest rate on daily and period-rest. Only a few facilities (by one or two banks) interest rate are fixed based on Base Lending Rate (BLR).

6. The interest rate reduction is an additional profit to Banks perhaps as a support for the anticipated losses during this recession year with negligible benefits to the dealers or the customers.

7. The public or car buyers do not benefit from the November interest revision nor does majority of Proton dealers.

8. The Public or potential proton buyer are still facing difficulty with securing hire-purchase loan to buy new proton cars given the high risk profile programmed for proton customers.

9. To improve the customers risk profile that is based on overall proton historical sales, the NPL for Proton brand name should be in a different category for new Proton car sales by Proton AUTHORISED DEALERS and different classification for ‘new-and-used-proton’ car sales by USED CAR DEALERS. Then the NPL will be more accurate and customer’s loan approval can be improved.

10. Government should only allow Proton authorized dealers to submit for new proton hire-purchase loan submission to Banks to mitigate unnecessary fraud, CBT and NPL (by unauthorized dealers). Currently any dealer can submit to the bank direct.

11. Unauthorized car dealer Hire purchase loan submission for new Proton cars contributes to a higher NPL. Authorized proton dealers had to comply with strict requirement by Proton and will not jeopardize their dealership for any fraud or syndicated buyers.

12. Factors that will spur the automotive industry include a more flexible and cheaper banking facilities, flexible loan duration, easier loan approval and a regulated pricing for second hand cars.

13. The public are heavily burden when the value of their existing car is less than the balance loan amount of the said car. This will further hamper the growth of the automotive sales.

14. 9 out of 10 customers would want to trade-in their existing car to buy a new car, but many are not able to trade-in their car, because the car value is lower than the balance loan amount. The value of second-hand or registered used cars car depends entirely on the banks prerogative on the financing amount.

BLOOD TYPE DIET

Blood Type Diet

Have you ever wondered why some dietary program works best for some people but when you strictly follow the same program, the result attained was minimal or negligible. Of course discipline is instrumental but my best discovery was the blood type diet book by Dr Peter JD Adamo.

Apparently a chemical reaction occurs when the food that you eat are digested and flow into your blood stream. This reaction is a genetic inheritance. Some food that we ate is not compatible with the blood type antigen and may cross-react with digestive enzymes and interfere with insulin production. This will in turn affect the immune system, reset the metabolic clock and in severe cases lead to cancer or serious illnesses.

A dietary programme may work best for some people with a particular blood type and if your blood type differs the diet programme gains may not be as beneficial. i wanted to maintain my weight but with a lower body fat level. I can only imagine and dream of getting so lean with a washboard abdomen until I discover the book by Dr Peter JD Adamo. I have tried a few dietary programme. i took up various high intensity gym and run training regime and had also went into extreme starvation to reduce body fat level but all without success. My body weight akin of the stock market fluctuates from 74kg to 66kg within weeks but my body fat level changes negligibly. The 6-pack was far from being visible.

I was consuming heavy lean protein from chicken and beef in my effort to gain good physique and lose body fat level. Little did i know that protein derived from chicken and beef has an adverse chemical reaction to blood type AB. There is a long list of the ‘avoid’ food but the chicken and beef was the most pronounced especially when sirloin steaks, Nandos chicken and KFC were my staple food. I followed the blood type diet strictly since November last year and had been very discipline with the run training and gym. Since the blood type diet, I was able to sleep better at night and felt more energetic. The insomnia, lethargy disappeared and my weight stabilises at 72kg with a lower body fat percentage. In less than two months, I celebrated the new year with a brand new 6 pack abs. A dream came true……….

I have always failed badly on every regular full blood check; from an unreadable cholestrol count, high sugar lever being diabetic and high uric acid with constant gout attack. Now, happiness is an understatement with a perfect blood test result.

hmmm i wonder if i can still collect the RM1000 each betting from Rhiza & Abu... the three of us enthusiastically placed a winner takes all bet for the first to get 6-pack abs (almost a year ago). Rhiza graduated from military college and Abu was a state runner (in his youth). Now that i won, i can happily reveal the secret of the blood type diet..... ;-)

The key to achieving great health and physique is to ‘Eat Right & Exercise’ well. Do not starve yourself and be unhealthy. There is no short cut to good health.

DATO NADZMI SALLEH- PROTON CHAIRMAN

DATO NADZMI MOHD SALLEH- PROTON CHAIRMAN

I am 12 years old… my age as a Proton dealer. It has been 12 years since I run my Proton dealership. I have been a member of the Proton Edar Dealers Association Malaysia (PEDA) since inception and was elected Deputy President for the past few terms. I was the 76th dealer that was appointed previously under USPD (or now known as Proton Edar) in 1997. The total dealer’s network idiotically grew to more than 400 dealers and now reduced to less than 300 and still decreasing.

I received an email from PEDA President as I was still recovering from the new year late night celebration notifying the committee members of his leave from the President’s office. PEDA President who operated his dealership for the past 14 years had surrendered his dealership and is taking leave as the president. Business cycle for Proton dealers has never been easy. Never since the 1998 recession… and now, we are faced with another recession. We swam through unfair competition of under-declared imported cars and public criticism against Proton but most detrimental effect was the internal policy introduced and implemented by past Proton management themselves unto the dealers: The appointment-spree of hundreds of dealers to chronies in a deteriorating market share and in the absence of sellable variance to excite the market. More than 100 additional dealers were appointed by Tengku Mahaleel management in anticipation of terminating EON. A political move that destroyed the dealers network and PEDA President became one of the 100s of casualties thusfar.

Under the PEDA constitution, the President post is left vacant when the dealership was surrendered and the deputy president will resume as the Acting President. I led my 15 committee members as the Acting President to officially meet the Proton new Chairman Yg Bhg Dato Nadzmi Salleh yesterday.

The meeting with Proton Chairman was at his request. We eagerly await the Chairman arrival at the Proton Board room while chatting Proton MD Dato Syed Zainal Abidin, Proton Edar CEO En Shukor Ibrahim and Proton Edar General Manager Sidik Abdul Hamid. Dato Nadzmi enters the Board room with his usual enthusiast. We saw immediately the passion of an entrepreneur at the driver’s seat.

In my opening speech to the Chairman, I conveyed my awkwardness in being the spokesman as PEDA Acting President which was inevitable when the President had ceased to be a dealer. I reiterate, the president as one of the hundreds of casualties of Proton incompetent policy as earlier mentioned. PEDA is duty bound by constitution to our members and advocate strongly for nurturing and rehabilitating the dealers as opposed to any downsizing.

Although I could not disclosed the details of the meeting, I mentioned as my closing statement, in my 12 years tenure as a Proton dealer as well as a member and now Acting President of PEDA, Dato Nadzmi is the first and ONLY Chairman that called upon PEDA, EDAM within less than a month of being appointed as Proton Chairman. This is also the first meeting in the history of PEDA that was chaired by Proton Chairman with the attendance of Proton Managing Director, Proton Edar Chief Executive Officer and General manager simultaneously.

PEDA has a good working relationship and has always been in constant regular discussion with Proton MD and Proton Edar CEO. Dato Nadzmi pro-active initiative and approach to understand issue pertaining to the network signals a fresh and energize start for the New Year and in anticipation of the recession.

This meeting attended by the prime movers of Proton, Dato Nadzmi (Proton Chairman), Dato Syed Zainal Abidin (Proton MD), Shukor Ibrahim (PESB CEO), Sidik Abdul Hamid (PESB GM) and PEDA full committee is also a signal of GREAT TEAMWORK to weather ahead of recession. This show of solidarity will strengthen Proton to re-gained its market share and become the industry leader.

There is only one mission from the great teamwork… the public. Without the recognition from the public, we will still fail. The teamwork mission now is to give Proton sense of belonging back to the public. The public is indeed our one and only employer.

2009 A CHALLENGING BUT A SPECIAL YEAR...

It is a New Year… 2009. The Year 2009 is indeed a special year for me. This year I will celebrate my 20th Anniversary since I was diagnosed to have Chronic Myeloid Leukaemia way back in 1989. Yes, I am well now under the medical term Permanent Remission or to be more precise a state where there is a non-existence of Philadelphia chromosome or in layman’s term, cure!

When I was first diagnosed, the average life expectancy for patient with leukaemia was 3-5 years without a Bone marrow transplant and perhaps longer years ahead with a Bone Marrow transplant. However, bone marrow transplant only has a 70:30 chances of success… 30% chances of failure or death.

Although I had various Graft Versus Host Diseases (a state of conflict between the existing cells in the body with the new marrow) after the bone marrow transplant and a relapse 5 years later which forced me to underwent a Post-Bone Marrow treatment, I have been well since. I am even an active marathon runner now.

Even though this year 2009 is a special year to me, I expect this year to be a very challenging year. This year, I look forward to publish my past experience, the painful moment living with cancer and my struggles in life with health, family and business. I felt so numb and emotionless when Doctor Nik Isahak first broke the news of the diagnosis in 1989. I was admitted and had missed school for a few months before the Lower Certificate of Education exam. The numbness disappeared the day I was discharged from Hospital. I went home and went through emotional cycles of sadness and disappointments with myself and the circle of people surrounding me. The emotional cycle evolved into anger with a drastic change in behaviour. I rebelled against everybody from family, teachers, friends and even girlfriends. I skipped school, pick up smoking, drinking, womanise and became notorious. Nothing else matters. I could not care less of what has become of me… after all, I will die in 3 years… who cares… and so I thought. The emotional cycle continues until a wake-up call… the day I woke up and make the best out of leukaemia. Since then, I expedited my studies and graduated from UK at the age of 20 and began my career at a Mechant bank before pursuing my dream as an entrepreneur.

2009 is also the recession cycle which is a tough year for business especially in automotive. However, in anticipation of the recession, I had established the Fasfik chain of workshop. In 1998 recession, almost all industries were badly affected except for 2 sectors that survived well in the downturn, namely, the food and restaurants and second was the car service centres. I survived the last recession through my small authorised Proton Edar service centre. Car sales suffered badly and my little workshop paid for my car and housing loan instalments. I trust this year will be tough if not as bad as the 1998 recession.

I will also attempt to beat my best 42km marathon timing of 5hours and 46 minutes as a motivation to keep healthy. I ran the Ambank International 42km Marathon last year. 5 hours 45mins is nothing great but given my past medical history, I never imagine completing even a 10km run. In attempted my first marathon in 2007. That was my first 42km TRAIL marathon in Salisbury, London which I completed in 9 hours. The same year, I ran the Singapore Standard Chartered marathon in 7 hours and 20 mins. Last year timing during the Ambank International marathon was so far my best timing.

Holidays and travelling is abstained as a resolution to be prudent given the recession year. HAPPY NEW YEAR everybody…….

AUTOMOTIVE INDUSTRY 2009 CHALLENGES

AUTOMOTIVE INDUSTRY CHALLENGES 2009

1. The automotive industry is expected to suffer with lower sales for the year 2009 due to the recession. Without sufficient support from the government to sustain the automotive sales and growth, automotive manufacturer, vendors and dealers will be badly affected.

2. The impact of the recession can be reduced if the automotive sales volume can be sustained. With encouraging sales, dealers, vendors and other stakeholder will not suffer much loss.

3. Automotive industry is unique as it is neither the seller’s market nor the buyer’s market but instead it is the BANK that controls the car sales via the vehicle financing. A car with the best technology, design or pricing is still not sellable unless the dealers were able to secure the bank financing for the customer hire-purchase loan.

4. Banking facilities and hire-purchase loan are the MAIN factor that will determine the sustainability of the automotive industry.

5. More than 90% of car dealers and vendors operate with banking facilities and more than 90% of car buyer, purchases vehicle via bank hire-purchase loan.

6. During the 1998 recession, all banking facilities and loans were frozen to the public as well as the dealers.

7. Any negative changes in the banking facilities (to dealers or vendors) and hire-purchase loan to the customer will gravely affect the automotive sector.

8. Pre-1998 recession, there were more financial institutions and banks that offers various financing packages to dealers and the car buyer. With more competition between financial institutions and banks, dealers and customers were immediately attended to with almost an immediate loan approval or a maximum approval period of 24 hours (approval SOP- AM/PM or morning HP-loan submission will get approval by evening.)

9. Post 1998 recession, the government had successfully initiated and completed the mergers of Banks and financial institutions. After the bank merger, options for bank financing and hire-purchase became limited within only a few big banks and without any financial institutions. Banks became choosy with the type of customers they deemed profitable. Hire-Purchase loan are no longer approved via direct interview with bank officers but through a computer programmed that is instilled with customers and vehicle risk profile. From the conventional am/pm pr 24 hours approval, hire purchase loan is now approved within a week.

10. The Risk profile for Proton car buyers differ from other model make. There have been various instances that the hire-purchase loan for proton car buyer were either reduced or rejected but the same customer were able to secure a higher hire-purchase loan to buy other non-proton model.

11. With a high inflation rate and essential items price increase, the risk profiles were adjusted and HP-loan approval became more stringent, understandably because of a lesser disposable income. Car dealers in Singapore and Thailand have informed that only 10% car loan submissions were approved due to the economic downturn. In other word, out of 10 applications for car loan, only 1 loan is approved.

12. The percentage of approval rate for HP-loan application in Malaysia is at 40%. This year 2009, it is possible for the approval percentage to be as bad as Singapore or Thailand. The percentage of approval is true base on direct feedback from dealers although official statistic from the Bank may state otherwise. The dealers know the true picture better.

13. Factors such as lower disposable income that is affected by high inflation, as well as possibility of retrenchment will also influence the HP-loan approval. Inflation and increase in the prices of essential item affected the public’s affordability to regularly service their existing HP-loan repayment and may result in an increase in Bank’s NPL. This in turn, will affect the risk profiling again and loan approval will be worse for future Proton buyers.

14. However, the global economic downturn is inevitable given Malaysia high international trade volume. However, the impact can be cushioned with government intervention.


HP LOAN APPROVAL AND BANK FACILITIES

15. To cushion the downfall in automotive sales, an easier approval will ensure sustainability instead of the conventional stringent & careful approach adopted by Banks during trying time. There are various factors that determines the customers and vehicle risk profile that was generated from historical data (especially customer’s historical credit pattern, past NPL and fraud cases). These risk profile can be adjusted to be more friendly and practical given the current economic downturn.

16. The terms and conditions of Bank facilities enjoyed by dealers, vendors or other stakeholders should be friendlier or flexible rather than any unfavourable variation to ensure the survivability of all stakeholders in the network. Customers and public will be better served with a healthy network.

THE PERCENTAGE MARGIN OF FINANCE & LOAN PERIOD

17. Currently, the maximum loan amount allowed for car financing is 90% of the On-the-Road car price for a maximum of 7 years (and perhaps 9 years for some model). A drastic change increasing the margin of finance from 90% to full 100% will enable the public to afford the purchase of a new car. When the loan repayment is spread over 12 years instead of the current 7 -9 years, the public can afford to service their HP-loan repayment given a lower disposable income due to recession. This will also avoid the possibility of high NPL.


OFFICIAL VALUATION OF REGISTERED USED CARS OR SECOND HAND CARS

18. There is no centre or independent body or organisation in Malaysia that is accredited to value the price of registered vehicles or second hand vehicles. The valuation of registered vehicles, are fixed by the Bank via the quantum the bank is willing to finance the registered cars. As an example, if the bank is willing to finance a Wira year 2000 for RM20,000, then the used car dealers will buy the car either at the same price or below the approved loan amount. This car is in turn sold for a few thousand profits only.

19. Without a proper valuation or regulated pricing of the second hand car prices, customers who bought a car under HP-loan financing will not be able to sell the car when the car value is lower than the balance loan amount.

20. Existing car buyers too will be blacklisted when they cannot afford to service the loan repayment during this downturn and thus increasing the NPL rate. Customer is then made a bankrupt when the car is repossessed and auction for an amount lower than the balance loan amount.


EPF WITHDRAWAL

21. The public should be allowed to withdraw their EPF to repay any outstanding HP-loan that will avoid NPL and financial blacklisting. The EPF withdrawal as a downpayment to purchase a new car will also spur and promote the automotive sales.


BANK HANDLING FEE

22. Dealer’s income was drastically affected with the ceiling imposed by the Central Bank (Bank Negara) on the Handling fees paid by the Bank.

23. In an independent study conducted by Ernst & Young benchmarking internationally 5 developed and neighbouring countries, Malaysia is the ONLY country that imposed a ceiling to the quantum paid. Singapore, Thailand, United Kingdom, Japan and Australia allow the market to dictate the quantum to be paid.

24. The Ernst & Young report also state that car Dealers in Malaysia have greater responsibilities, liability, exposure and work in coordinating Hire-purchase loan submission and approval as compared to the 5 developed and neighbouring countries.


INSURANCE

25. General insurance or specifically Motor Insurance accounted to approximately 20% of the dealer’s income. Our income is affected when the Bank embarked in the sales of motor insurance by-passing the car dealers (who are all an authorised agent) via indirectly-forcing the customer to renew the motor insurance (and road tax) with them by prohibiting the collection of the vehicle registration card kept by the bank.


BANK

26. Banks discriminate dealers by categorising and prioritising dealers who subscribed to their Bank facilities with unfavourable terms. The unfavourable terms includes restricting non-insurance related banking-facilities only to dealers who are agent to the Bank’s insurance. The Bank’s insurance are inferior in services and packages offered (compare to other provider) to dealers and any insurance commission for insurance renewal are forfeited by the bank.

27. Various other unnecessary charges were also imposed to dealers that further reduced the dealer’s already deteriorating income due to higher cost of operation.

28. Banks have also embarked in selling car to the Bank’s existing customer. The sales are channelled to a ‘special’ dealer’s network created by the Bank. The Bank customers enjoy special privileges such as special interest rates but with a lower income to dealers.

29. The Merger of Banks and Financial Institutions had led to the introduction of various unfavourable terms and activities in adverse to the dealers and the public. Unfavourable terms that burdens the dealers as well as the public should be supervised especially during expected worsen economic downturn.