What is SSPN?

Many people have heard of Skim Simpanan Pendidikan Nasional or SSPN, but few really know what it is about. Undoubtedly, most people know SSPN as the governments way of encouraging us to set up a piggy bank for our kid’s future education. But prepare to be surprised! Even though it is focused on building enough fund for your children’s education in the future, you too can benefit from SSPN. Find out how right here!

What is SSPN?

Skim Simpanan Nasional or better known as SSPN is a savings scheme designed by PTPTN for the purpose of higher education. In a nutshell, SSPN works like the typical savings account, but MINUS the ability to withdraw your money willy-nilly at any time.This SSPN savings scheme is perfect for new parents who wish to save for their children’s future tertiary education, be it in colleges or universities. What makes SSPN a good option as a future savings scheme is that it provides some pretty attractive incentives aside from mere savings : SSPN also comes with insurance coverage, matching grants for low income families, annual dividends, and the most attractive benefit, tax relief on your net savings in a particular year.

SSPN-i : A new and improved SSPN, with “i” standing for Islamic. (you don’t need to be a Muslim to apply though)

Who HAS to Open a SSPN-i Account

Those who wish to apply for a PTPTN loan must have an SSPN-i account with a minimum balance of RM20. However, do check with PTPTN before opening an account because they tend to change this particular rule every now and then.

Who CAN Open a SSPN-i Account

Any Malaysian is eligible to have a SSPN-i account. The best candidate for SSPN-i accounts are people with children or dependents, we will explain this in more detail below.

SSPN-i : Opening an Account

We’ll give you the step by step guide on how to open an SSPN-i account!

**Step 1 : Determining Your Age Category and Eligibility **

Age Group : 1 to 18 years

Account must be opened by parents / legal guardian. Account can be maintained until the child turns 28. After the age of 28, He or she has to open his or her own account.

Age Category: 18 to 28 years

Malaysiansaged18 to 28 have an option of opening their own accounts or have it opened by their parents / guardian.

Age Group : 29 and above

Malaysians aged29 and above have to open their own accounts.

Step 2 : Where To Open Your SSPN-i Account

You can either open an account at the PTPTN service counter at One Stop Center in KL Sentral or at these following banks :

• Bank Simpanan Nasional (BSN)
• CIMB Bank
• Maybank
• Bank Islam
• Bank Rakyat
• Agro Bank

Step 3 : Documents needed

The documents that you need in order to open an account are as follows :

• Three copies of the account application form (Borang Permohonan Pembukaan Akaun) which can be obtained online OR can be obtained FREE at One Stop Center or Banks listed above.
• A copy of the depositor’s MyKad, military ID or Police ID
• A copy of the beneficiary’s birth certificate or MyKid or MyKad
• A copy of certificate of adoption / legal documents (for adopted beneficiaries)* A minimum of RM20.00 is required to open an account (but typically more to qualify for SSPN benefits)

Should I Open an SSPN Account?

Ahhh…to open an account or not to open an account? Ultimately, it all depends on you, but if you do not have a beneficiary, you won’t be eligible for the income tax relief so we probably say given the withdrawal restrictions and variable interest, for long term risk-free savings, best to plop your money in the top rate FDs in Malaysia .

If you have children or just been blessed with a child and want to start savings for your child’s education, SSPN is definitely a good option for your child’s education savings thanks to its income tax relief benefit on the RM3,000 limit, which will dwarf any other type of savings income in the market.

However, if you’re looking for ways to save your money for your children beyond the RM3,000 yearly limit, you may want to know more about junior savings accounts in Malaysia here .

SSPN : Features & Benefits

What makes SSPN different from regular banks are the benefits that they offer, which we will list down for you!

**1. Income Tax Relief (up to RM780 savings a year!) **

This is the benefit that is the driving force for most people to open an SSPN account, but be warned the income tax relief only applies to:

• Parents or legal guardians who open an SSPN account for their children / child as the beneficiary are eligible for income tax relief up to RM3,000 per year. UPDATE: LIMIT INCREASED TO RM6,000 IN LATEST BUDGET 2013 ANNOUNCEMENT, FULL DETAILS HERE
• Working parents with separate tax submissions and separate SSPN accounts dedicated to the same beneficiary (the same child) are given a separate tax relief to the maximum of RM 3,000 to each parent per year.
• Parents with a joint taxation but own a separate SSPN account each, but for one child (the same child) will get up to the maximum of RM3,000 per year combined.

How do I benefit from the Tax Savings?

Note : Have a read of our Income tax article to know more ways on how to save on your personal income taxes! The personal income tax rate for Residents of Malaysia follows a progressive tax schedule, this means that the higher your chargeable income, the higher the tax rate you will have to pay (More chargeable income = More Tax). Chargeable income is not the same as your gross salary or actual income for the year (in fact chargeable income is usually much lower).To calculate your chargeable income, the formula is as follows:
> Chargeable Income = Total income Tax exemptions Tax Reliefs
Example: Assuming your money comes from these sources:

Salary : RM60,000 salary per year
Local bank interest income: RM1,000
Property rental Income (p.a.): RM10,000
Total Income: 60,000 + 1,000 + 10,000 = RM 71,000.

All local banks are tax exempted, so your local bank interest income of RM1,000 can be deducted.
Tax Exemption = RM 1,000

Standard Individual Tax relief: RM9,000 individual tax relief as well as the Relief for EPF contributions: RM6,000 (your EPF contribution should have been 11% of RM60,000, ie RM6,600 but you only get to minus off max RM6,000).

Tax Relief: 9,000 + 6,000 = RM 15,000
Chargeable Income: RM71,000 RM1,000 (RM 15,000) = RM55,000.

How much is the tax for RM 55,000? Just use the table below to find out!

Chargeable Income	Tax Rate	Cumulative Tax
From RM0 - RM2,500	0%	RM0
From RM2,501 - RM5,000	1%	RM25
From RM5,001 - RM10,000	3%	RM175
From RM10,001 - RM20,000	3%	RM475
From RM20,001 - RM35,000	7%	RM1,525
From RM35,001 - RM50,000	12%	RM3,325
From RM50,001 - RM70,000	19%	RM7,125
From RM70,001 - RM100,000	24%	RM14,325
RM100,001 and Above	26%

Using the table above, your income tax for the year is RM3,325 + (19% x RM5,000) = RM4,275.00, making your effective tax rate equal to 6%. (RM4,275 / RM71,000).

If you save the full RM3,000 into SSPN during the year, your chargeable income will go from RM55,000 to RM52,000, resulting in an interest expense of RM3,325 + (19% x RM2,000) = RM3,705, saving you RM570.

By depositing into your SSPN-i account every year, you can reduce your chargeable income even further up to a limit of RM3,000. Depending on your tax rate, if your tax rate is 7%, you can save RM 210. If your income falls on the highest tax rate (26%), you can save RM 780 per year on your tax just by opening an SSPN-i account! That’s equivalent to 26% interest on top of any ‘dividend’ payments, making it the top savings account, beating every product out there. Obviously you only get the tax savings on the RM3,000 once, so over the long term the effective rate of interest will be lower when ‘averaging it out’.

**I Have no Beneficiary (SSPN-i is My Own Account) **

Most will probably wonder, can I still get this income tax relief benefit if I don’t have a beneficiary ie. you open an account for yourself? Unfortunately not. Opening your own account will not make you eligible for the income tax relief, plus you will be subject to the strict withdrawal restrictions (explained below).

2. Insurance Coverage

SSPN offers depositors free death insurance coverage, but only if the saving is RM 1,000 and above in the SSPN account. The terms for this coverage are as follows:

• Depositors aged 18 years - 65 years : Entitled to insurance coverage & death benefits
• Beneficiaries aged 1 day - 28 years : Entitled to death benefits
• Insurance coverage is split into two : General Insurance (For individuals) and Trust Insurance (Insurance Amanah-opened by head/management representative of orphanage)
• Insurance coverage is paid RM to RM for general insurance (up to RM 50,000)* Insurance coverage is RM 100,000 for Insurance Amanah or Trust Insurance
• Death Benefit is RM 2,000 for depositors and RM 500 for beneficiaries

3. Yearly Dividend (Interest on Savings)

Another perk of SSPN is its yearly dividend rate or profit (this is effectively an interest rate, but as per Islamic principles its called a dividend). Its certainly not high or market leading (the best long term FD rates can give rates of 4% and above, see our Best FD Rates in Malaysia article ), so with the withdrawal restrictions (explained below) in place, one would probably not chase this account for its high ‘dividend’. On a separate note, this dividend income is exempted from income tax (its effectively interest, so treated the same as normal bank interest). In the past, the dividend rates were as follows :

Year	SSPN Dividend (%)
2004	3
2005	4
2006	4
2007	4
2008	4
2009	2.5
2010	3.25
2011	3.75

4. Matching Grant for Low Income Families

The Matching Grant (Geran Sepadan) is another benefit of opening an SSPN-i account. Basically, a matching grant is a financial incentive that aims to help parents with an income of RM2,000 per month or less by giving them financial endowment of up to a maximum of RM10,000.Quite obviously, the sole purpose of this incentive (other than to help ease the financial burden of lower income parents) is to encourage low income depositors to deposit more money and increase their SSPN account savings.

Eligibility

Depositors with children and have a combined household income of RM 2,000 or less at time of account opening. The matching grant will become eligible as soon as a child is accepted into a diploma or degree in a higher learning institution approved by the government.

Combined household income : Income from father + mother < RM 2,000

Matching Grant Amount : How much Will I get?

If you fit the eligibility terms above and thinking of applying for a matching grant, the amount depends on your savings and savings period. Naturally, the higher and longer your savings, the more you will get (but maximum is RM 10,000).

New Rules

PTPTN is notorious for its ever changing terms and conditions, but here are the new rules for applying a matching grant:

Depositors who Open an SSPN-i Account From 15 January 2010 - Eligibility for the matching grant is based on the depositor’s family income during savings withdrawal or account closing.A copy of the latest salary slip/ income statement certified by an authorised person and a copy of MyKad /military card /police card of the spouse is needed for depositors with a monthly family income (basic salary) not exceedingRM2,000 for consideration of the matching grants during savings withdrawal or closing of the account.

Existing Depositors with an SSPN-i Account Before 15 January 2010 - However, for existing depositors who opened an account before15 January 2010, determination of eligibility for the matching grant remains the same, that is, based on family income of the depositor during account opening.A copy of the salary slip/ income statement produced during the opening of the account must be certified by an authorised person and copy of MyKad/military card /police card of the spouse is needed for depositors with a monthly family income (basic salary) not exceedingRM2,000 for consideration of the matching grants.

SSPN : Disadvantages

SSPN comes with quite a few attractive advantages, but it also has its downsides.

Income Tax Relief is NOT Available for Individual With Own SSPN Account

As this account aims to promote savings for higher education and not for individual interest, the income tax relief is not made available unless you have a legal beneficiary for your account (your own children OR a child under your legal care OR immediate family members).

So to summarise, you can still open an account for your nephew, auntie, best friend etc. but unless you fall under the categories above, you will not be given the income tax relief!

Withdrawing Your Money

Unfortunately, withdrawing money from your SSPN account is not a simple task! Unlike the normal savings account, SSPN has very strict rules when it comes to withdrawing your money.

Depositors can only withdraw their money once a year, and the maximum amount that is allowed to be taken out is RM 500 or 10% of your total savings!

A 100% withdrawal is possible but will require the beneficiary’s offer letter to local university or colleges, a vague statement on the beneficiary ‘no longer wishing to participate in the educational process’, or in the event of the beneficiary’s / depositor’s death or incapacitation.

How To Assess A Potential Investment In A Business For First Timers

Planning to invest in a business for the first time?

It can be a daunting prospect. On the one hand, it could be a lucrative opportunity to exponentially grow your investment and generate a good return. On the other hand, you face the risk that you could lose your money completely, if things don’t go as planned.

Ah, the investor’s dilemma…the eternal balancing act between potential risk and potential reward…

Don’t worry, help is at hand. While there is obviously no way to totally mitigate risk, here are some tips to help a new investor, evaluate the business opportunity in a more informed way. Using these methodologies, you might be able to discover some information that will at least better equip you to make a more informed decision before putting your hard-earned capital, into a business venture.

Firstly, we should understand that there are a range of factors that should be evaluated when assessing a business. Some are financial in nature, while some are non-financial in nature.

So what should we look for?

1. Look at the past performance of the company. This approach takes a historical perspective. Here, the financial statements are the “magic document”. All the info on past performance can be extracted from the numbers and from calculating some of the key ratios.

Generally, there are 4 key classes of ratios ie. liquidity, solvency, profitability and efficiency. Some of these key ratios are the current ratio, and debt-to-equity ratio, ROE (Return on Equity), ROI (Return on Investment), ROA (Return on Assets) and ROIC (Return on Invested Capital). It must be noted however that the level of insight a potential investor can glean from these ratios, depends very much on the nature of the business, the type of industry and other subjective factors.

2. Look at is how much money the company makes, and how much of that is turned into profit. Look at how the company performed last year, and compare with its performance this year. Also look back 3-5 years to spot trends. Is the Management of the company able to successfully convert revenue generated from business activities (such as sales of products/services) into profit?

Here, a couple of other ratios would be helpful in your assessment, such as gross margin (ratio of profit to sales), gross profit (sales minus COGS or cost of goods sold), net income margin (ratio of net income to sales) and operating margin (ratio of operating profits to sales). You could also look at the operating profit, which is derived from gross profit minus operating expenses, plus net income which equates to operating profit minus interest and tax.

3. Do some digging to find out more about the operations of the business. Are key operational components such as accounts receivable and inventory turnover being efficiently managed so as to optimise operations? This is a good way to assess how efficiently the current management is running the company. It allows you to spot potential flaws and weaknesses in the operations systems which could be negatively impacting the profitability of the business.

4. Due diligent with some key ratios which will help with your assessment here are efficiency ratios such as inventory turnover (ratio of cost of goods sold, to the inventory held by the business). If this ratio yields a high value, it means that inventory is efficiently converted into sales, and this is good news.

Another ratio to look at is the ratio of uncollected payments/sales on credit, to amounts paid by/received from the customer. Again, when the accounts receivable turnover is high, it means that the company is collecting its outstanding payments in a timely manner which is good for business.

To find out more about these and many other ratios and how to apply them to your assessment, just google any one of these ratios and a variety of free resources will guide you further.

What about non-financial metrics?

Taking a forward-looking perspective, you’ll want to get a gauge on how the business is likely to perform in future. To an extent, this is really the most important question, as the answer will determine whether you will lose money or make money on this venture!

But sadly, no crystal ball for you to gaze into here. No one can be 100% sure how a business will perform in the future, it’s pretty much guesswork and luck. But, there are some things to look out for which can help you with your evaluation.

Here’s where some industry/domain expertise would come in very useful:

i. If you are familiar with the business you’re investing in, your experience and domain knowledge will give you a keener insight into the details than someone who is going ahead only on the numbers without understanding the back story. Like everything else, domain expertise can be learnt even if you don’t already have it. Start reading up, researching, talking to people in the business. Use every available free (and if you have the means, paid) resource at your disposal to deepen your knowledge and understanding.

ii. In today’s fast-paced world, today’s incredible business success story could be tomorrow’s sad failure. Carry out a SWOT analysis on the industry to check out threats, risks and also opportunities, impacting the business. For links to some free SWOT analysis tools.

iii. Keep abreast of industry developments. Stay up to date with domestic and international business news. It’s also a good idea to do some comparison/benchmarking. Look at the performance of the company or business against that of its competitors in the industry. This should not be a challenge for companies in established/mature industries.

However, if you are thinking of investing in a startup, or in a company operating in a new or super high-tech space, you might not have easy access to comparison models. For such businesses at the cutting-edge of technology, you may need to look overseas to global markets for guidance.

Happy investing and wishing you all the very best in your investment decisions in 2015!

Read More http://kclau.com/investment/potential-investment/ - See more at: http://kclau.com/investment/potential-investment/#sthash.Mf9wualw.dpuf

EPF / KWSP Dividends for Year 2014: 6.75%

Employees Provident Fund (EPF / KWSP) has declared a dividend rate of 6.75% for 2014 with a total payout of RM36.66bil.

The Employees Provident Fund (EPF) Board, with the approval of the Minister of Finance, today announced a dividend rate of 6.75 per cent and RM39.08 billion gross investment income for financial year ended 31 December 2014, an increase of 11.66 per cent compared with RM35.00 billion in 2013.

The 6.75 per cent dividend amounted to a total payout of RM36.66 billion where RM5.41 billion was required to pay every one per cent of dividend rate for 2014. This was 10.53 per cent higher compared with RM4.91 billion paid for every one per cent dividend rate for 2013, in tandem with the rise in contributors’ savings.

In a statement today, EPF Chairman Tan Sri Samsudin Osman said, “Despite uncertainties in both the domestic and global markets, our result in 2014 outperformed what we had achieved in 2013. It is worth mentioning that our global investments had contributed 33 per cent towards our total income for 2014 despite being only 23 per cent of our total assets.

“No doubt the end of 2014 had been challenging for the EPF due to the slump in the global oil prices. The weakening of the ringgit in the fourth quarter added further uncertainty. However, our prudent diversification approach had given us the edge and resilience to weather the economic conditions, particularly in the global markets.”

He said in order to correspond with the Fund’s objectives to preserve and add value to members’ savings, the EPF aims to provide at least a return of two (2) per cent above inflation over a three-year rolling period. The dividend declared for 2014 is equivalent to a rolling three-year real return of 4.11 per cent over inflation.

The latest dividend payout was derived after deducting the net impairment allowance on financial assets, unrealised losses due to foreign exchange rate and derivatives prices, investment expenses, operating expenditures, statutory charges as well as dividend on withdrawals.

The 2014 gross investment income was mainly driven by Equities in the domestic and global markets covering both emerging and developed countries. The asset class recorded an investment income of RM22.91 billion in 2014, up 17.37 per cent compared with RM19.52 billion in 2013, and contributed 58.63 per cent to the total gross investment income in 2014. Almost half of the income of the equity investment is derived from EPF’s global portfolios.

The majority of the EPF’s investment assets were placed in low risk fixed income instruments as this asset class provided a stable stream of income in the long run.

Loans and Bonds contributed RM7.57 billion in income, compared with RM7.51 billion in 2013. This rise was attributed to the performance of the global portfolios by both internal and external fund managers. Malaysian Government Securities and Equivalents recorded RM6.59 billion in income, registering a rise of 6.14 per cent, compared with 2013. Meanwhile, Money Market Instruments posted an income of RM619.65 million.

Real Estate and Infrastructure contributed RM1.39 billion in investment income in 2014. This inflation-linked asset class, which the EPF has started invested in since 2010, has over the years been showing encouraging performance and is a 22.31 per cent increase from 2013.

Tan Sri Samsudin said these asset classes were effective inflation hedging tools, befitting the Fund’s long-term objectives as a retirement fund, and the EPF would continue to explore opportunities in real estate, infrastructure and natural resources in accordance with its Strategic Asset Allocation (SAA).

“We foresee the challenges ahead given the rising levels of economic uncertainty in both domestic and global markets on the back of low oil prices, potential reduction in global GDP growth and further compression in fixed income yields. Recent quantitative easing in global markets and a more deflationary outlook will lower expected nominal yields for long-term investors like the EPF. However, we expect inflation to remain benign given our aggregate demand and lower energy costs. With this in mind, this year will see us continue upholding our policy of judicious risk management and investment allocations that targets a return that beats the rate of inflation.

“The bulk of our investments is in the domestic market and although the breadth of investment products and liquidity to trade in large volumes are somewhat limited, we remain optimistic due to our local market’s strong fundamentals. Based on this premise, we will continue to tap into opportunities in the local market that fit into our risk-return profile. The bottom line for the EPF remains the real returns for our members and therefore, we will continue to be prudent, diversified and disciplined in our approach to investing.”

As at 31 December 2014, the EPF’s total investment assets stood at RM636.53 billion, up 7.91 per cent from RM589.87 billion in 2013. The overseas exposure, which makes up 23 per cent of the Fund’s total investment assets, is part of the diversification programme to generate consistent returns in the long-term.

Tan Sri Samsudin added, “Syukur Alhamdulillah, I am proud to say that the achievements recorded last year as well as the numerous awards won by the EPF were attributed to the hard work and commitment of our team to continually deliver to our members.”

Members can view the 2014 dividend announcement via EPF’s Facebook page at “Kumpulan Wang Simpanan Pekerja”, Twitter at KWSPBuzz and on YouTube at KWSP Malaysia.

The EPF account statement for the crediting of the 2014 dividend is available online via i-Akaun at myEPF website (www.kwsp.gov.my). Alternatively, members can obtain their statement via EPF Kiosks or visit any EPF branches starting Sunday, 8 February 2015.

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Spend and win big at Taobao with Maybank2u

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China Stationery Limited IPO

China Stationery Limited, an integrated plastic stationery China-based company is scheduled to be listed in Main Market on 27th July 2011.

The IPO consists of public issue of 90 million ordinary shares at an IPO price of RM0.90 per share with SGD0.001 par value. Out of this, 60 million shares are allocated to Malaysian public, and the remaining 30 million shares are allocated for private placement. On top of that, 133 million shares are for sale to selected investors.

The IPO is expected to raise RM85.5 million.  The proceeds will be used for the purchase of machinery, for research and development, advertising, branding and promotional activities as well as working capital and listing expenses.

China Stationery will launch two new patented products namely anti-tampering plastic envelope and second-generation plastic tape printer this year. The target customers for the new products are global express mail service players as well as post offices in China and other countries.

Its manufacturing plant is located in Fujian province, China and plan to establish a factory in Malaysia within a year.

The company’s house-brand products are marketed in China and globally in over 45 countries to more than 400 customers, including distributors, retailers and corporations located in China, Asia, Europe, America and other regions.

China Stationery intends to pay up to 20 percent of their net profit as dividend starting from 2012 onwards.

The table below is the financial summary for China Stationery Ltd.

	FYE 2007	FYE 2008	FYE 2009	FYE 2010	FPE 2010	FPE 2011
Revenue (RM’000)	233,179	413,380	556,304	669,878	371,770	451,049
Profit after Tax (RM’000)	97,240	126,299	168,518	189,072	102,203	105,904

M&A Securities is the Adviser, Underwriter & Placement Agent Adviser, while Sanston Financial Group is the Sub-Placement Agent for the IPO.

For those who are interested in China Stationery IPO you may subscribe at ATM machines or viaInternet Banking.

The subscription period is opened until 10th February 2012 at 5pm. Tentative balloting date is on 14th February while the allotment date is on 23rd February 2012.

View China Stationery prospectus in Bursa Malaysia webpage.

China Stationery Ltd stock name in Bursa Malaysia is “CSL”.