Offshore or “International Finance Centre”

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Offshore centres are trying to change their image and perception. Some would like to not be called offshore, like the Isle of Man or Guernsey, while others interjected to the International Monetary Fund (IMF) to  Integrates the Offshore Financial Center Assessment Program.

It is true that expressions like “offshore” and “tax haven” have no agreed standard definition, which is a problem. I understand why they prefer to be called “international finance centre” - the expression is a lot less tainted than “offshore”.

Why, of why?

No, it doesn’t. It simply is a result of a great PR to answer the mis-conception the offshore term has received over the past few years due to international efforts against money laundering, tax evasion and terrorist funding. Hollywood did not help either…Not that these are not serious crime, but their number pale in comparison to the number of legit investments and accounts held in “offshore” jurisdiction. Therefore, offshore centres are trying to not throw the baby out with the bathwater by changing their brand image. Pretty smart.

But does it really makes a difference?

No it doesn’t. The fact that we name something differently does not change its substance. I don’t want to go philosophical here, but a word is slightly more than the signification one gives it. Hence changing their appellation from offshore to international finance centre does not change the way your account or platform work, its benefits and restrictions.

Time will tell…

At the end of the day, this will only succeed if people stop using the term offshore to designate such centres. And this battle is far from over! Old habits are hard to get over - especially in england!!

Skandia Launches New Funds

Royal Skandia is one of the big gun when it comes to offshore saving products. They built their reputation on offering a wide choice of funds to play with and a great aggressive marketing strategy targeting advisers. They have recently released a bunch of new funds. Each link will lead you to the related fund’s fact sheet.

A pretty good seletion. I particularly like the ASEAN, Climate change and Brazil Equity ones. They offer good upside and may not suffer too much from the current credit crunch. But they are for pretty agressive investors…

Why the Isle of Man?

Many advisers recommend expatriates to consider shifting or establishing their portfolio in offshore jurisdiction. One of the most popular is the Isle of Man (IoM) - a small celtic island located between England and Ireland. Why is that so?

The Isle of Man is a ’so-called’ low tax economy with no capital gains tax, wealth tax, stamp duty or inheritance tax. This means that for non-resident (i.e. if you don’t live there) you don’t pay tax. This alone explain why so many people like the IoM. As simple as that. But there is more to this tiny island than a simple tax-attractive piece of land.

In order to become one of the leading offshore center, they had to set in place protections laws that ensures your money will still be there when you will need it. There is no point building up wealth if something has gone wrong along the way with the company looking after your money. Therefore, the IoM protections mirror or exceed the investor those you will fin in jurisdictions such as the UK, the US and Australia.

Two that are particularly significant.

1975 – Plan Holder Protection Act
The first is the 1975 Plan Holder Protection Act which was updated last in 2000. It is there to protect investors against losing their money if their company did fail. The way this works is that each quarter, financial institutions have to pay a premium based on the size of funds they are managing into a central provident fund managed by the IOM authorities. This fund then guaranties 90% of the value of your account by law.

1996 – Financial Service Act
The second is the 1996 Financial Service Act of IOM. It regulates and supervises financial companies to be sure that investor interests are safeguarded. As an example, that they have to submit audited accounts every six months instead of annually like they would in the UK or US for example. This is for the IOM to be sure that client monies are properly accounted for. Another part of that law is that all assets under management by those companies must be held by a third-party custodian to be sure that a company can’t use client money to bail itself out should they experience financial difficulties.

On top of all that, the Bee Gees were born there! How not to like such a place !!

Malaysia Road Driving Rules

I just received an email from my beloved wife with the following text apparently written by a foreigner residing here: David Astley. He has his own website and blog , where you can enjoy his copywritting, witty humour, and beautiful pictures.  I just bookmarked them and added them to my RSS. David if you read me, I’d like to offer you a Latte or a Beer ! Let met know mate ;-)

A guide for expatriate drivers in Malaysia

Since arriving in Malaysia in 1997, I have tried on many occasions to buy a copy of the Malaysian road rules, but have come to the conclusion that no such publication exists (or if it does, it has been out of print for years). Therefore after carefully observing the driving habits of Malaysian drivers, I believe I have at last worked out the rules of the road in Malaysia . For the benefit of other expatriates living in Malaysia, and the 50% of local drivers who acquired their driving licences without taking a driving test, I am pleased to share my knowledge below:

Q: What is the most important rule of the road in Malaysia?
A: The most important rule is that you must arrive at your destination ahead of the car in front of you. This is the sacrosanct rule of driving in Malaysia . All other rules are subservient to this rule.

Q: What side of the road should you drive on in Malaysia ?
A: 99.7% of cars drive on the left hand side, 0.2% on the right hand side, and 0.1% drive in reverse (be on the look out for drivers reversing at high speed in the left hand lane of freeways, having just missed their exit). Therefore on the basis of ‘majority rules’, it is recommended that you drive on the left. However,
be aware that only 90% of motorcyclists travel on the left hand side - the other 10% ride in the opposite direction or on the sidewalk. Fortunately, motorcyclists traveling in reverse are rarely seen.

Q: What are the white lines on the roads?
A: These are known as lane markers and were used by the British in the colonial days to help them drive straight. Today their purpose is mainly decorative, although a double white line is used to indicate a place that is popular to overtake.

Q: When can I use the emergency lane?
A: You can use the emergency lane for any emergency, e.g. you are late for work, you left the toaster plugged in at home, you are bursting to go to the toilet, you have a toothache or you have just dropped your Starbucks coffee in your lap. As it is an emergency, you may drive at twice the speed of the other cars on the road.

Q: Do traffic lights have the same meaning as in other countries?
A: Not quite. Green is the same – that means ‘Go’, but amber and red are different. Amber means ‘Go like hell’ and red means ‘Stop if there is traffic coming in the other direction or if there is a policeman on the corner’. Otherwise red means the same as green. Note that for buses, red lights do not take effect until five seconds after the light has changed.

Q: What does the sign ‘Jalan Sehala’ mean?
A: This means ‘One Way Street’ and indicates a street where the traffic is required to travel in one direction. The arrow on the sign indicates the preferred direction of the traffic flow, but is not compulsory. If the traffic is not flowing in the direction in which you wish to travel, then reversing in that direction is the best option.

Q: What does the sign ‘Berhenti’ mean?
A: This means ‘Stop’, and is used to indicate a junction where there is a possibility that you may have to stop if you cannot fool the cars on the road that you are entering into thinking that you are not going to stop.

Q: What does the sign ‘Beri Laluan’ mean?
A: This means ‘ Give Way ‘, and is used to indicate a junction where the cars on the road that you are entering will give way to you provided you avoid all eye contact with them and you can fool them into thinking that you have not seen them.

Q: What does the sign ‘Dilarang Masuk’ mean?
A: This means ‘No Entry’. However, when used on exit ramps in multi-storey car parks, it has an alternative meaning which is: ‘Short cut to the next level up’.

Q: What does the sign ‘Pandu Cermat’ mean?
A: This means ‘Drive Smartly’, and is placed along highways to remind drivers that they should never leave more than one car length between them and the car in front, irrespective of what speed they are driving. This is to ensure that other cars cannot cut in front of you and thus prevent you from achieving the primary objective of driving in Malaysia , and that is to arrive ahead of the car in front of you. If you can see the rear number plate of the car in front of you, then you are not driving close enough.

Q: What is the speed limit in Malaysia ?
A: The concept of a speed limit is unknown in Malaysia .

Q: So what are the round signs on the highways with the numbers, 60, 80 and 110?
A: This is the amount of the ‘on-the-spot’ fine (in ringgits - the local currency) that you have to pay to the police if you are stopped on that stretch of the highway. Note that for expatriates or locals driving Mercedes or BMWs, the on-the-spot fine is double the amount shown on the sign.

Q: Where do you pay the ‘on-the-spot’ fine?
A: As the name suggests, you pay it ‘on-the-spot’ to the policeman who has stopped you. You will be asked to place your driving licence on the policeman’s notebook that he will hand to you through the window of your car. You will note that there is a spot on the cover of the notebook. Neatly fold the amount of your fine into four, place the fine on the spot, and then cover it with your driving licence so that it cannot be seen. Pass it carefully to the policeman. Then, with a David Copperfield movement of his hands, he will make your money disappear. It is not necessary to applaud.

Q: But isn’t this a bribe?
A: Oh pleeease, go and wash your mouth out. What do you want? A traffic ticket? Yes, you can request one of those instead, but it will cost you twice the price, forms to fill out, cheques to write, envelopes to mail, and then three months later when you are advised that your fine was never received, more forms to fill out, a trip to the police station, a trip to the bank, a trip back to the police station, and maybe then you will wish you had paid ‘on-the-spot’.

Q: But what if I haven’t broken any road rules?
A: It is not common practice in Malaysia to stop motorists for breaking road rules (because nobody is really sure what they are). The most common reasons for being stopped are: (a) the policeman is hungry and would like you to buy him lunch; (b) the policeman has run out of petrol and needs some money to get back to the station; (c) you look like a generous person who would like to make a donation to the police welfare fund; or (d) you are driving an expensive car which means you can afford to make a donation to the police welfare fund.

Q: Does my car require a roadworthy certificate before I can drive it in Malaysia ?
A: No, roadworthy certificates are not required in Malaysia .However there are certain other statutory requirements that must be fulfilled before your car can be driven in Malaysia . Firstly, you must ensure that your windscreen is at least 50% obscured with English football club decals, golf club membership stickers or condo parking permits. Secondly, you must place a tissue box (preferably in a white lace cover) on the back shelf of your car under the rear window. Thirdly, you must hang as many CDs or plastic ornaments from your rear vision mirror as it will support. Finally, you must place a Garfield doll with suction caps on one of your windows. Your car will then be ready to drive on Malaysian roads.

Q: What does a single yellow line along the edge of a road mean?
A: This means parking is permitted.

Q: What does a double yellow line along the edge of a road mean?
A: This means double parking is permitted.

Q: What does a yellow box with a diagonal grid of yellow lines painted on the road at a junction mean?
A: Contrary to the understanding of some local drivers, this does not mean that diagonal parking is permitted. It indicates a junction that is grid-locked at peak hours.

Q: Can I use my mobile phone whilst driving in Malaysia ?
A: No problem at all, but it should be noted that if you wish to use the rear-vision mirror to put on your lipstick (women only please) or trim your eyebrows at the same time as you are using a mobile phone in the other hand, you should ensure that you keep an elbow free to steer the car. Alternatively, you may place a toddler on your lap and have the child steer the car whilst you are carrying out these other essential driving tasks.

Q: Is it necessary to use indicator lights in Malaysia ?
A: These blinking orange lights are commonly used by newly arrived expatriate drivers to indicate they are about to change lanes. This provides a useful signal to local drivers to close up any gaps to prevent the expatriate driver from changing lanes. Therefore it is recommended that expatriate drivers adopt the local practice of avoiding all use of indicator lights. However, it is sometimes useful to turn on your left hand indicator if you want to merge right, because this confuses other drivers enabling you to take advantage of an unprotected gap in the traffic.

Q: Why do some local drivers turn on their left hand indicator and then turn right, or turn on their right hand indicator and then turn left?
A: This is one of the unsolved mysteries of driving in Malaysia .

Economist Weekly - Health Care, Tourism and Globalisation

The ASEAN region is famous for its tourism, sandy beaches and colourful temples. But a new trend is emerging over the past few years where occidentals get on the plane not to enjoy hot sand and clear blue water - at least not in the first place - but to get treated here. Many hospitals in Thailand, Singapore and Malaysia are seeing an influx of tourists, especially Americans in their world class hospitals. You even have websites like www.malaysiahealthcare.com which purpose is to promote this trend !

To discover more on this very interesting phenomenon, I recommend the following read Operating profit. Of course, you know me, it is from the Economist. Otherwise this section would have a different title!

What I love about this is that it really embodies the power of liberalism and competition. The US system, which became inefficient and over-priced, better adapt or it will start feeling the heat!

Social Security for Expats

Living abroad is exiting. Everyday is a new adventure, a new discovery. Of course, some discovery are exiting - others are not. Most developing countries do not yet have comprehensive social security system. And while many expats are prepared for medical, some do forget that our social security back home are a lot more extensive than just medical.

Let’s quickly review the scope of a good social security system - I’m not talking US here ;-)

Medical Cover - Covers everything related to medical (duh!), maternity, Emergencies etc.

Retirement - Help you plan your retirement. Some system promises you a specific monthly benefit at retirement, others provide you an individual account from which you can draw an income later on.

Critical Illness Cover - Kicks-in and provide you with a regular income should you suffer from a critical/incapacitating illness - i.e. you can not work anymore but still need to make a living

Income Protection - Provides you with an income were you to lose your job

Family Cover - Helps you with some reduction or tax benefits in order to ease the burden of raising childs

Social Aid - Financial help for those who are in difficult situations due to their handicap, health, social or economic difficulties when other system can not cover them or are insufficient.

I put them down in order of importance from an expat point of view.

The Medical cover is maybe the easiest to grasp for everybody.

The retirement one also is quite obvious for many, usually those whose social security system provide them with an individual account grasp this concept very fast- they are already used to be responsible for their own future income.

Critical Illness cover and income protection are less top of mind for many. Yet they are very important. Especially the critical illness cover. Statistically, we have more chances of suffering from an incapacitating trauma than we have of dying young. Yet most people are familiar with life insurance, but not with critical illness.

The last two are more macro concerns. They are paid for by our taxes and we pay for those in our country of residence.

So - did you cover the 4 pilars of social security? Or did you simply go for the adventures?

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