Malaysia's Mahathir wins shock election victory, toppling long-ruling regime

Malaysia’s veteran ex-leader Mahathir Mohamed, 92, won a historic election victory Thursday, in a political earthquake that toppled the country’s scandal-plagued premier and ousted a regime that had ruled for over six decades.

Renting vs buying a one bedroom apartment in Dubai

Wondering whether to rent or buy an apartment in Dubai? We simplify the comparison and analyze the cost of renting vs buying a one bedroom apartment in Dubai. Do watch this video and subscribe the channel for more videos in future.

Top Company Mission Statements

A mission statement is a formal short written statement of the purpose of a company. It should guide the actions of the organization, provide a sense of direction and guide decision-making. The list presents the most inspiring mission statements of the top companies.

Amazon

‘’It’s our goal to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online.’’

Amazon started off selling books in 1995 and now prides itself on offering the ‘Earth’s biggest selection'.

Chanel

‘’To be the ultimate house of luxury, defining a style and creating desire, now and forever.’’

Chanel’s objectives seek to maintain its legacy while successfully moving it to the future and continuing to be at the forefront of fashion.

Chevron

‘’To be global energy company most admired for its people, partnership, diversity and high performance.’’

Chevron lists its values as integrity, ingenuity, trust, protecting people and the environment, partnership and high performance.

Coca-Cola

‘’To refresh the world in mind, body, and spirit. To inspire the moments of optimism and happiness through our brands and actions. To create value and make a difference.’’

The Coca-Cola company's values are leadership, collaboration, integrity, accountability, passion, diversity, and quality.

eBay

‘’Provide a global trading platform where practically anyone can trade practically anything.’’

On its launch, eBay had 5 key values, including the belief that people are basically good and everyone has something to contribute.

Facebook

‘’Facebook’s mission is to give people the power to share and make the world more open and connected.’’

The social media giant’s values are a focus on impact, move fast, be bold and build social value.

 Ford

‘’We go further to make our cars better, our employees happier and our planet a better place to be.’’

Ford goes on to say that it’s dedicated to building great products to strengthen business and benefit communities.

Google

‘’Google’s mission is to organize the world’s information and make it universally accessible and useful.’’

Those at Google wrote a ‘10 things list’ early into the website’s life which features key values such as ‘focus on the user and all else will follow’ and ‘you can make money without doing evil'.

IKEA

‘’At IKEA our vision is to create a better everyday life for the many people.’’

The Swedish furniture retailer believes the low prices they sell their extensive product range to help them achieve their vision and allows most people to afford them.’’

Intel

‘’Delight our customers, employees and shareholders by relentlessly delivering the platform and technology advancements that became essential to the way we work and live.’’

Intel provides its employees with objectives which outline what Intel should do to continue to be ‘essential’, these include ‘excel in customer orientation’ and ‘deliver unrivaled microprocessors and platforms’.

Life is Good

‘’Spreading the power of optimism. Life is not perfect. Life is not easy. Life is good.’’

Life is Good aims to spread optimism through its 10 ‘superpowers’: gratitude, creativity, authenticity, love, courage, compassion, humor, fun, simplicity and openness.

McDonald’s

‘’McDonald’s brand mission is to be our customer’s favorite place and way to eat and drink.’’

McDonald’s aims to provide exceptional customer experiences by focusing on – people, products, price, and promotion.

Microsoft

‘’Our mission is to enable people and businesses throughout the world to realize their full potential. We consider our mission statement a commitment to our customers. We deliver on that commitment by striving to create technology that is accessible to everyone – of all ages and abilities. ‘’

Microsoft’s core values are integrity and honesty, big challenges, accountability and self-criticism.

MOZ

‘’The TAGFEE code” our mission to be as Transparent, Authentic, Generous, Fun, Empathetic, and Exceptional as possible.’’

MOZ understands that they’re responsible for their own reputation, success, brand image, and contributions they make to the marketing industry, and as such apply the TAGFEE code to all areas of the business.

Nike

‘’To bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete.’’

Nike follows ’11 Maxims’ which describe and shape its culture and include: the consumer decides, evolve immediately and do the right thing.

NORDSTROM

‘’Offer the customer the best possible service, selection, quality, and value’’

Nordstrom says that in-store or online, wherever new opportunities arise, they work relentlessly to give customers the most compelling shopping experience possible.

Starbucks

‘’To inspire and nurture the human spirit – one person, one cup  and one neighborhood at a time.’’

Starbucks has 4 key values, including ‘creating a culture of warmth and belonging, where everyone is welcome'. Other values focus on dignity and respect and challenging the status quo.

Toyota

‘’Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people.’’

Toyota uses a tree to symbolize their vision from ‘roots to fruits’, seeing that tree as a symbol of natural strength that continues to flourish and grow.

Twitter

‘’To give everyone the power to create and share ideas and information instantly, without barriers.’’

VP of HR Brian Schipper says the company’s purpose is to ‘give everyone the ability to be heard, seen, and share their thoughts and experiences as they happen'.

Virgin Atlantic

‘’Our mission statement is simple, yet the foundation of everything we do here at Virgin Atlantic Airways… to embrace the human spirit and let it fly.’’

The airline says to make a success of their business strategy they focus on the business and leisure markets, and driving efficiency and effectiveness.

Sources: 

Unum, Simple Marketing, Entrepreneur, Moz, Fortune, Hubspot. 

VAT in the UAE - Impact on the SMEs

UAE resident alert: 5% VAT is officially coming by Jan 1, 2018, reads a headline in Khaleej Times (12 Feb 2018)

VAT is added on each layer of supply chain and is ultimately reflected in the final price. For example a 5% VAT on a good of cost AED 100 will cost the buyer AED 105, the seller will collect AED 5 and deposit with the government in their tax filings. Hence, businesses will have to become the tax collection arm for the government.

Impact of VAT on businesses

Profitability
VAT is borne by the end user, hence the gross profit of a business remains the same. The impact is shifted to the final customer of a good or service.

Prior to VAT, for example, a mobile retailer buys a mobile from the wholesaler for AED 100 and sells for AED 110, making a gross profit of 10% on the sale.
After VAT is introduced, the same mobile will cost the retailer AED 105 (input tax) and sell for AED 115.5 collecting AED 5.5 (output tax) from the end-customer. The difference between output and input tax AED 0.5 is the tax income for the government.

Source: Ministry of Finance, Government of Dubai website

The above example is applicable to businesses who will register for tax filings. For unregistered companies, VAT will be paid on purchases, but no output tax will be collected, hence tax expense will become part of the cost of sales and this will affect the gross profits.

In summary, registered companies will not take a hit on their gross profits but unregistered companies will.

VAT will potentially increase the operating and admin expenses for the SMEs affecting their net profit margins. Cost of collecting taxes and compliance costs will add to the admin expenses. However, if these processes are electronic (quite possible) and training is made available, these costs can be kept on the lower side.

Pricing Strategies
A lot of the businesses who face intense competition and a 5% increase in their prices will affect the demand for their goods and services may decide to further lower the prices to remain competitive post-VAT. However, it can be argued that a VAT of as low as 5% may not have a significant impact on demand for certain consumer goods.

Liquidity
VAT will definitely affect the working capital of the SMEs. The timing difference between output and input tax will affect the liquidity of businesses. Businesses with poor credit control will be affected the most.

For businesses paying suppliers upfront and offering credit to customers should plan in advance on how to manage cash flows. On the contrary, businesses buying on credit and selling on cash basis will benefit.

ERP & Process flows
Businesses will have to bear costs in improving their financial reporting systems and hire/outsource accounting needs of the business.

Wages and Salaries
In the current economic conditions, payroll seems to be least affected as the labor supply exceeds demand for manpower.

Conclusively, VAT will create opportunities for government to switch to non-Oil sources of income. In the short run, jobs will be created in finance departments and a lot of audit and consultancy firms will start providing tax services to their existing clientele.

Information Available so far:
Rate: 5%
Implementation date: 1 Jan 2018
Minimum Turnover: AED 3.75 million per annum
Frequency of filing: Quarterly (3 months)
Registration opens: last quarter of 2017
Will tourists pay VAT: Yes

Businesses can only benefit out of VAT, by preparing towards it!

To Privatize or not to Privatize: PIA

PIA - Unfortunate-much needed - Privatization

Nostalgia can be additive. It is hard to imagine an airline which was once run by Air Marshal Nur Khan, under whose exemplary leadership PIA was portrayed as the Ambassador of the nation is now edging towards privatization.

PIA not only helped Emirates & likes of Singaporean airlines to spread its wings but also owns the famous Roosevelt Hotel in Manhattan where several movies like Wall Street, Maid in Manhattan, Men in Black and The Dictator have been shot.

What went wrong?

Although there are lot of reasons for PIA’s downfall, but for me the negative numbers and accumulated losses in the balance sheet are results and not causes of the failure.

With pilots found drunk, crew members smuggling mobile phones, ghost employees who get paid for nothing, political recruitments, poor planning, interference from the govt and the elite class which travels business and uses privileges at a feeble cost are all to be blamed for this. There is no reason for the hue and cry for an ailing elephant close to its fall.

It is hard to imagine that an airline with merely 26 operational aircrafts supports a staff of 16,600 regular and 2,700 contractual employees. With 742 employees per operational aircraft, PIA is perhaps the world’s least efficient airline. No wonder the airline was running losses up to 3 billion rupees each month. In comparison, Air India with 27,000 employees for a fleet of 122 aircrafts carried 221 employees per aircraft. Several western airlines have fewer than 20 employees per operational aircraft.

Nawaz government seems to be following the Kenyan model. In 1994, the Kenyan government had sold 26% stake to a strategic partner and by the year 2000 it had doubled its passengers and cargo and started recording profits.

I strongly feel after the 26% stake in PIA is sold to an ‘unknown strategic partner’, the real story will begin which will be a turnaround for the national carrier. In the second stage, the GOP might manage an IPO which will be quite attractive for the Gulf and Pakistani financial institutions and the government might maintain 10-20% stakes in the airline. PM Nawaz recently spoke about employees being rewarded for not falling prey to the trade unions and reporting to work so there is a hint of 3-5% of stake for PIA employees who support this stance of the government.

Unfortunately, turning the table and making PIA profitable is not a possible task for the current government as the mess is huge. The objective here is to transfer this ‘burden’ on tax payers’ money to a taxable source of income for the GOP. The extra baggage needs to be offloaded!

Dying Oil Prices – Who are the winners and losers?

Global oil prices have fallen sharply over the past eight months, leading to significant revenue shortfalls in many oil exporting nations, while consumers in many importing countries are likely to have to pay less to heat their homes, drive their cars or run their energy houses.

From 2010 until mid-2014, global oil prices had been fairly stable, at around $110 a barrel. But since June prices have more than halved. Brent crude oil has now dipped below $50 a barrel for the first time since May 2009 and US crude is down to below $48 a barrel.

The reasons for the decline – China slowing down coupled with US surging production & shale gas revolution, OPEC’s determination to not to cut production and Iran edging towards entering global trade, black market sales from Iraq & Syria which means additional supplies.

So who are the WINNERS?

Mainly those countries that need to import oil. Within Asia, China, India, South Korea, Japan and Thailand have been the gainers. The benefits, cutting them short, lower inflation, lower business costs, improved purchasing power, correction of balance of payment and cut in interest rates!

Cheaper oil translates into lower inflation. Oil is used as a raw material in various industries such as petrochemicals, fertilizers and etc. As oil prices decline, the logistics become more economical and hence consumers will have to pay less. This will also make these products more internationally competitive. However, most of the agro economies in Asia continue to rely on imports of both petrochemicals and fertilizers due to increasing demands, unusual weather patterns and logistic issues due to poor infrastructure.

Both India and Indonesia have taken the opportunity to cut energy subsidies and raise taxes on energy. India imports 75% of its oil, and analysts say falling oil prices will ease its current account deficit. At the same time, the cost of India's fuel subsidies could fall by $2.5bn this year - assuming oil prices stay low.

Consumer inflation has hit a 5-year low in China. However, lower oil prices won't fully offset the far wider effects of a slowing economy.

Who has lost and why?

Most of the big oil producers like Malaysia and western Asian countries. For Malaysia energy exports account for 20% of the national economy, so cheaper oil is a problem.

Saudi Arabia, the world largest and the most influential oil exporter, needs oil prices around $85 in the long run, but seems less interested to cut down supplies in order to pressurize the US shale gas industry and it can afford to continue this way for long as the country sits on a reserve fund close to $700 billion. Gulf producers such as the United Arab Emirates and Kuwait have also amassed a considerable foreign currency reserve, which means that they could run deficits for several years if necessary.

Europe is an interesting case here. A lot of analysts believe that Europe in general will benefit from the collapse in oil prices but its exposure to Russia jeopardizes the benefit realization. A recession in Russia and depreciation of the Russian Ruble will reduce investments in Moldova, Armenia, Belarus and all those European states which are vulnerable to dislocations in the Russian labor market because of the reliance on remittances from Russia.  Plus most of these countries import oil to process into other products such as petrochemicals and fertilizers, for which oil accounts for major portion of the cost. A decline in oil prices means fall in prices of these commodities too.

Will Iron Ore Prices bounce back ?

As per a latest report from CNBC iron ore prices will exhibit an upside potential of $ 17 from current levels. To read more, kindly visit: http://www.cnbc.com/id/101932339 

Stackers and reclaimers moving iron ore to rail cars at Rio Tinto's Port Dampier operations in Western Australia's Pilbara region, March 4, 2010. Agence France-Presse/Getty Images

Why we think prices will not bounce back?
We assess the prices to continue to decline or to the best stabilize at current low levels due to the following reasons:

China has a steelmaking capacity of 900 million tons. As per recent govt. policy China aims to cut 28.7 million tons which is the largest cut in the last four years. By 2017 it aims to cut 80 million tons of steelmaking capacity

Real Estate in China accounts for two-thirds of global iron ore purchases and 20% of China’s GDP. China Home prices fell 10.5% over first seven month of the year. Analysts believe that every city has an oversupply problem. According to China Real Estate Index System, 31 Chinese cities have excess housing inventories that will take more than three years to work down, after taking into account the amount of residential land sold between 2011 and 2013 and their respective annual housing sales.

Plus, writers and analysts believe that a cut in iron ore mining will cushion the decline in the commodity price. This might be theoretically right but in real it takes time to increase supplies when economies heat, similarly there cannot be immediate cut in supplies in response to declining demand. There has to be a ‘time lag’ affect.

Vale, Rio Tinto, BHP Billiton and FMG all raised their iron ore production and shipments by over 10% in the first half of 2014. At the same time, Shandong Iron and Steel Group Co. Ltd and China Railway Materials Group Co., Ltd have been successively shipping iron ore from mines they invested in Sierra Leon back to China. In Jan-Jun, China's iron ore imports from Sierra Leon jumped by 4.627 million tonnes YoY to 9.442 million tonnes. Moreover, average prices for imported iron ore were RMB100/tonne lower than those for domestic iron ore, with the former pegged at US$118/dmt and the latter pegged at RMB843.3/wmt (USD 138).

The imported iron ore market will remain bloated in the second half year, and is under pressures to go upwards amid slow crude steel output growth and increasing supply.

On Aug 18, 2014, iron ore swaps for Aug, Sept and Oct delivery fell to US$93.17 (-1.11)/dmt, 92.25 (-1.41)/dmt and US$92(-1.31)/dmt CFR respectively on the Singapore Exchange. Platts 62% Fe IODEX dropped by US$0.5/dmt to S$93.25/dmt CFR North China.