ARTICLES, DISPUTE RESOLUTION, IDEAS

Electricity and its Discontents

Nikola Tesla, the inventor of modern electricity

 
‘The price of monopoly is upon every occasion the highest which can be got…The one upon every occasion the highest which can be squeezed out of the buyers, or which, it is supposed, they will consent to give…”
 
Adam Smith, The Wealth of Nations (1776)

 

Tenaga Nasional Berhad or TNB, once called National Electricity Board (NEB) is the country’s biggest and sole supplier of electricity. 

As a government-gifted monopoly backed by parliament-made laws protective of its economic interests, TNB has over the years grown profitable, powerful and technologically advanced. Recently the public’s acceptance of TNB as a necessary behemoth has turned into open hostility and even disdain as more consumers have come out accusing TNB of overcharging and high-handedness.

Consumers who find their home or factory power supplies cut and court actions taken against them by TNB for stealing electricity through meter tampering are especially unhappy and aggrieved. 

These consumers are slapped with debilitating (and sometimes multiple) court summonses by TNB. The claims for such “loss of revenue” are usually punitive and sometimes for sums of money far exceeding what most consumers are capable of benefitting from their alleged transgression.

A consumer when sued by TNB for meter tampering is like a soccer team that enters a match with a pre-existing 1-0 score at kick-off in favour of the rival.

Much of the apparent unfairness is due to the way the courts have interpreted the abstruse provisions of the Electricity Supply Act 1990 – a statute specially enacted for the benefit of TNB’s privatization.

Recently the judicial tide seems to be turning in favor of consumer rights over the unrestrained free hands of corporate monopoly.

In a first ever decision, the Court of Appeal in Putrajaya stunningly slashed TNB’s claim against a customer for tampering with the power meters in its plastic making factory in Johor Bahru.***

TNB’s claim for RM1.1 million of loss revenue from tampering was dramatically reduced by the court to just RM28,000 – a reduction of over 97% !

The appeal court’s panel of three learned judges unanimously sent a strong signal that TNB can no longer simply claim any unreasonably huge amount it wants from the consumer based on the previous logic of the courts that a thief who has stolen has no right to question but, as punishment, must merely accept whatever amount the victim has estimated to be his loss.

Now the Court of Appeal says TNB to be sure can still claim the lost income from meter tampering by using an estimate but this estimate must not only be fair and reasonable. It must also be mathematically calculable and capable of standing in the face of the facts.

Lim Yew Yi , LLB (Malaya), Advocate and Solicitor

*** The case of Tan Kwee Siang v Tenaga Nasional Berhad, decision of the Court of Appeal was delivered on 23 May 2019. Kerk & Partners acted for the appellant Tan Kwee Siang. The case is at the time of this article unreported

ARTICLES, PROPERTY, TAXATION

Malaysia’s RPGT 2019: More Pain, Less Gain

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From 1 January 2019 onwards RPGT will have to be paid regardless of how long you have owned your property. Real Property Gains Tax (RPGT) is the share of money you must pay to the government from the profit you make in selling your house.

Previously under Najib Razak RPGT in 2014 was hiked up to the highest rates in its history. This time Malaysia’s first-time populist coalition government has outdone its maligned predecessor. The new government has announced that not only will those high rates increase but RPGT will also now be perpetually payable.

Until 31 December this year if you are the owner of your property for more than five years then you pay zero % RPGT if you are Malaysian and 5% RPGT if you are a company or a foreigner.

Effective  1 January 2019 the rates of RPGT for property sold after five years is 5% for Malaysians and 10% for foreigners.

RPGT rates for property sold within three years and on its fourth and fifth years remain fixed at 30%, 20% and 15% respectively.

There are people who see tax as a great equalizer, that RPGT is a necessary evil to curb greedy speculators who drive up house prices. They feel that RPGT imposed on property sellers and landowners is fair since these wealthy people enjoy more of society’s resources and comfort.  Indeed some form of rich tax is needed to reduce Malaysia’s income gap which is the widest in Asia and one of the worst wealth distributions in the world.

To do this the new government will do well to also look into the following:

  • Exempt all houses that are principal place of residence from RPGT. At present sellers are only given a once in a lifetime exemption. Any owner who can prove that his house has been used as a home should not have to pay RPGT.
  • Make owners of multiple houses and commercial units fork out more for RPGT but be lenient on the small house owner who may be selling his house at a better price to upgrade his family or maybe just to survive inflation.
  • Abolish or reduce the present requirement to retain and send to the government  within 60 days of the sale 3%  (Malaysian) or 7% (foreigner) from the property price as security for RPGT. The deposit in Malaysia is normally 10% of the price so such large retention for RPGT will leave a house seller with no cash after he pays his agent and lawyer. He has to wait 6 months or more to get his money from the sale and up to a year for his RPGT refund from the government. It is discouraging to note that Malaysia holds a world record for using the longest average time to transact a property deal.
  • Allow interest paid for bank loans to be deducted for RPGT. Since RPGT is going to be perpetual and applicable many years after you first bought your property most gain on property will not be real but inflationary.
ARTICLES, IMMIGRATION, MIGRATION

MM2H : SOME UPDATES AND CLARIFICATION

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Malaysia this year is a country excited for change. But judging by the way the country is handling the change it wants to make to immigration especially MM2H, it appears not to know how.

Last month the Malaysian government sent a notice to all MM2H licensed agents to tell them that the usual monthly committee meetings to vet applications and to approve them in batches have stopped. All applications they say will now go straight to the Minister responsible for immigration for his decision.

Unhelpfully the Government did not say how this new procedure will affect the time taken for processing approvals. We can only guess that the new processing time will likely be longer than the 6 months it now takes for approval.

The Government’s notice worded in officialese and clumsily circulated via MM2H Agents Association group chat has caused widespread concern and confusion. The notice has misled many into thinking the MM2H programme has been suspended. It hasn’t.

Applications for MM2H are still being accepted. Actually more applications have been received lately. The increase is fueled partly by rumours that the government will soon raise the bar for MM2H or maybe even disband it altogether.

So for those who are interested, you can and should still apply now for MM2H. It’s just that you need to brace yourself for a longer waiting period.

Kerk Boon Leng