Sunday 15 April 2012

Civet coffee gains popularity [Updated, April 2012]

By Jackie, Researcher
Type of business industry: Food & beverage
Product: Civet Coffee/ Kopi Luwak/ Kopi Musang

“Kopi” is the Indonesian word for coffee and the “Luwak” is the indigenous animal
who plays an “active” role in the harvesting of the raw coffee cherries.

Introduction

The objective of this week's research is to find out which type of coffee is considered the most expensive coffee in the world. A deep discovery and understanding was done through viewing a number of media news including CNN to find out the processes involved to make this coffee, the global market price of this coffee, the customers' response after drinking this coffee, the issues related to this coffee, and the potential of doing this type of coffee business.

"Kopi Luwak" or civet coffee is coffee made from coffee berries which have
been eaten and passed through the digestive tract of the civet cat.

Strange, but true!

Well, it is hard to believe that the most luxury coffee in the world is actually made from “animal dropping”. Yeah, that is true. In order to be more specific, I would say that it is made from Asian Palm Civet’s [and other related civets] dropping. Ideally, these civets are kept in cage and feed on beans of coffee berries as their major diet. They enjoy eating the berries fleshy pulp. Then, those coffee berries are passed through their digestive system and finally defecated. Amazingly, the defecated coffee beans are still in shape. This is because the civets eat the berries but the beans inside the berries which pass through the cat’s digestive system are still undigested. After that, their dropping is gathered and undergoes a series of processes such as washing, sun-drying, light-roasting and brewing. Some customers state that these beans yield an aromatic coffee with much less bitterness.


Coffee connoisseur Chris Rubin explains what makes "kopi luwak" worth the exorbitant price: 
"The aroma is rich and strong, and the coffee is incredibly full bodied, almost syrupy. It's thick with a hint of chocolate, and lingers on the tongue with a long, clean aftertaste. It's definitely one of the most interesting and unusual cups I've ever had."

Connie Veneracion, a consumer who had given a jar of civet coffee beans by her brother and family who had just came back from Indonesia in 2009 said:                                                           
“I tore the seal, opened the jar and the first thing I noticed was the glossy exterior of the coffee beans as though they were coated with oil. After dinner, I dumped half of the contents of the jar into the blender and processed the beans to a coarse grind. The aroma was decidedly fruity and sweet. The ground civet coffee beans went into the coffee percolator and, several minutes later, I was excitedly serving civet coffee to everyone who cared for a cup.”

Expert cupper and Sprudgie Award winner Stephen Vick had this to say on his kopi luwak experiences:
 “On the cups that I didn't present defect I found very mild sweetness and acidity with some grassy, iodine notes and a pretty rough finish. One of four cups was moldy and another single cup showed phenol. I tasted band-aids, iodine, and oyster.”

[Again, those comments were only based on their personal opinion and thus, controversial]


Price and availability
Ranging from US$120 and $600 (RM400 to RM2,000) per pound. 

“One small cafe in Queensland Australia has Kopi Luwak on the menu at A$50.00 (US$33.00) per cup. Brasserie of Peter Jones department store in London’s Sloane Square started selling a blend of Kopi Luwak peanut and Blue Mountain called Caffe Raro for £50 (=US$99.00) a cup” 
(Civetcoffeestarbucks.blogspot.com, 2011)

Sumatra is the world's largest regional producer of civet coffee, followed by Java and Sulawesi [This data might have been changed as Southeast Asia’s countries entrepreneurs such as Malaysia have started to invest heavily in production in their homeland due to exceptional high market price]. It is mainly sold in Japan, Taiwan, South Korea and United States. Most of us simply cannot afford it.

Issues
1. Halal or non-halal (vary in different country)
 Indonesia: Majelis Ulama Indonesia (MUI) declared that civet coffee (locally known as Kopi Luwak) is   
 Halal and can be consumed by Muslims as long as the beans are thoroughly cleansed before grinding. 
 MalaysiaThe exotic and highly-priced kopi luwak (Civet Cat Coffee) has not received Halal status from 
 the National Fatwa Council, Malaysia. A Harian Metro report advised Muslim consumers to refrain from 
 drinking the coffee due to its unconfirmed Halal status. 

2. Fake Civet Coffee
 Due to the lucrative market for high-priced Civet coffee it seems inevitable that some unscrupulous people   
 would try to capitalize through dishonest means, passing off as Civet coffee certain coffee beans which 
 indeed had not been consumed and expelled by a Civet. 

3. Maligned, abused, and beleaguered
    The civet cat has an unknown future on many fronts. The civet was traditionally hunted as a pest, but a   
    booming market in civet coffee has changed its fate, turning it from ‘pest’ into ‘producer’. 


Business Potential
In term of economic perspective, this business industry has a bright future due to its high demand, but limited supply. Franchises like Coffee Bean, Starbucks and etc which are available globally are selling it at extraorbitant price indirectly boosting more new entrepreneurs [mostly from Southeast Asia] to venture into this industry. This commodity has no price control as it is classified under luxury good, instead of essential items. It is usually considered as small scale manufacturing business as the current annual output produced from factories are not very large [usually in pounds instead of tonnes]. However, the difficulties are the methods to keep those civets healthily, halal or non halal issue, law constraint [protected species in some countries], and health benefits [some manufacturers didn’t undergoes the correct cleaning processes, resulting in producing a harmful output].     

Related links:
CNN News Team Tries Kopi Luwak Coffee: http://www.youtube.com/watch?v=KnuelLBQOxY
Tested.com Tests Kopi Luwak Coffee: http://www.youtube.com/watch?v=dk8_HabWkW0
Kopi Luwak Coffee - $65 a cup!: http://www.youtube.com/watch?v=sV7yvCoI0EY
Kopi Luwak 猫屎 咖啡: http://www.youtube.com/watch?v=fyHBi-jM5N4


Friday 6 April 2012

Property speculation in Malaysia. [Updated, April 2012]

By Jackie, Researcher

The impact of property speculation towards the younger Malaysian generation, the causes and effects of this speculation as well as the future predictions and forecasting about potential property investment in Malaysia. [Updated, April 2012 with 2012 Real Property Gains Tax (RPGT)]


From stylish, contemporary homes to luxurious condominiums with lush greenery

Introduction

The objective of this research is to get a clearer picture on property speculation issues which have started to happen in Malaysia since 2007. Well, after seeing some real-life examples through buying and selling (as my family is dealing with this kind of business), doing ample researches through property news investment like attending Gavin Tee’s seminar, following up government plans [eg. Malaysia My Second Home (MM2H) programme and 2012 Real Property Gains Tax (RPGT)], studying the “conversion strategies” played by the broker and developers and analysing the increase rate of oversea investors, I have decided to share my experiences here.

Overview

The real estate market had gone through a “roller coaster ride” in the recent years, from a soaring market in 2008 to a depressed market in 2009 and skyrocketing again in 2011. There is a lot of controversial points related to this current issue whether Malaysia is currently facing “real estate bubble” [also known as property bubble as well as housing bubble] or not? Steps and measurement have been taken by both government (by implementing RPGT) and banking sector (by disallowing full-loan to Malaysian property buyers).



What is wrong with Malaysia My Second Home (MM2H) programme?

The objective of this programme is to encourage or attract foreigners to retire in Malaysia or spend extended periods here. The major advantages offered by the government include low cost of living, developed infrastructure, friendly Malaysians, attractive tourist destination, quality environment, good climate and variety of food. This programme however, has induced some foreign investors to invest instead of staying here. As most of them are very rich, they used to left their house here waiting for the price to shoot up and then sell back to earn an attractive capital gain.

“Conversion strategies” played by unethical brokers and greedy developers.

Honestly, most of them prefer to sell house to foreigner. Why? The reason is simple. This is because they have a higher purchasing power than Malaysian. Also, please note that some of them are come from Middle East, Japan, Korea, China and Singapore. Ok, now let's take at look into a deeper ground. Have you ever feel that developers always build high luxury condos, semi-detached houses, bungalows instead of low price apartments or moderate double storey houses? This is all about Economics! Land is limited. Why they want to build a lower priced house when they can build a higher priced house on the same land? They are not afraid of unable to sell all the units because now their strategy is to build in a smaller scale instead of large. Plus, they are not afraid of having no customers as they have found the “new higher purchasing power customers from other countries”.

What will happen in the future?

Well, a fresh degree graduate can only earn an average of RM2,000 to RM3,000 per month. The cost of living in Malaysia is rising plus most of them need to pay installment for cars normally when they need to go to work as there is still some “lacking” in public transport in Malaysia [Not all place is reachable, mismatch of time and inconvenient]. Recently, banks only lend up to 70% of the house in value. The new mortgage lending rule applies only to borrowers taking up a third housing loan to curb excessive investment and speculative activity in urban areas. In short, "the rich will become richer, while the poor have to work harder". Some experts spark up rumors by saying that Malaysian young generation will turn into a condition, so called "homeless generation" too, and indirectly speed up the government's plans to handle this worrying situation. 

Steps and measurement taken by the government to solve this issue.

Implementation of 2012 Real Property Gains Tax (effective from 1 January 2012) with chargeable gains from disposal of real properties are as follow:
1. Sold within 2 years = RPGT 10%
2. Sold above 2 years and below 5 years = RPGT 5%
3. Held more than 5 years will be exempted from the Real Property Gains Tax (RPGT)


Predictions and forecasting

Potential property investment in the future kindly refer to this talk given by President of SwhengTee International Real Estate Investors Club, Gavin Tee’s on Ipoh Property Talk at The Haven Lakeside Residences:
Part 3: http://www.youtube.com/watch?v=YUfSg-cgtjM




Upcoming issue***

"In order to tackle the rising of house prices in Malaysia, the government is now considering whether is it appropriate to double the minimum price of houses which the foreigners can purchase"





Wednesday 4 April 2012

Gold Investment Forecast and Predictions [Updated, April 2012]

By Jackie, Researcher

This is a private college research on gold investment based on historical data, and analysis for the future market trend in global market. Well, after seeing a lot of theories, stories and discussion; my curiosity and doubtfulness towards gold investment grows deeper and stronger. The main idea is whether it is worthwhile to invest your money in gold investment rather than putting your money in bank's fixed deposit account to earn a fixed rate of interest. Therefore, after getting some internal news plus doing some researches on this matter, I have decided to share this knowledge and ideas with you guys.

Firstly, there are several advantages of investing in gold.
  1. The stability of gold tends to be stable from year to year. Have you ever heard of gold price fall? The answer might be yes, but most of the time is no. Why? In Economic, gold is consider as 'limited supply'. Therefore, as time passed by, the demand of gold will shoot up due to the 'increasing demand' in raw stock to make jeweleries.
  2. Not affected by inflation like other currencies do (Zero inflation effect).
  3. Can be withdrawn in the future in physical state to make jeweleries (In bank, you might have to buy minimum quantity in order to do this).
The disadvantages are as follow:
  1. You might suffer loss if the gold price drops; earn nothing if gold price stay stagnant, and eventually waste a lot of time in order to wait for the price to shoot up again.
  2. Transaction/ procedure fees.
Below are some examples of an gold investment deposit account offered by CIMB Bank Malaysia.




Perhaps, this graph will give a clear picture on the historical data of global gold price. It is positive gradient on overall.


So, what will happen next?

According to the Star newspaper which I have read on this 16 of February , it is written there "The Gold Bullion Entrepreneurs Association of Malaysia (GBEAM) expects gold price to hit US$2,000 per ounce by mid-year from the current US$1,733 per ounce as the weakening global economy would drive more funds to safe-haven investments such as gold". 

Therefore, based on my calculation there is a high opportunity of making 15.4% capital gain on investment, if the prediction is correct. Although risk is still there, but it has been minimized as ample forecasting have been made by experts. I am not saying that they will be certainly right, but their probability of making wrong is very low. 

Another popular theory I always heard is "purchase gold when the gold price is low, sell it off when the price is high". This theory is basically closely related to capital gain maximization. 

So, what is the right time to sell? Answer: during the peak price. An OCBC Bank report in January 2012, has forecast that gold price would be around US$1,800 per ounce by the end of 2012. That means the falling occurs between June till December this year.

In conclusion, it is very hard to say that gold investment is highly-profitable. This is because it depends on market situation. It is advised that investors should always keep on updating themselves with the latest market information and get some views from experts. Whenever you can foreseen the opportunity, why don't you give a try. Remember, in Economic, whenever a marginal benefit of doing something is greater than its marginal cost. Just do it! And you will never regret. Do not let the opportunity cost gone like that.

Thanks for spending sometime to read this. Any constructive opinion is highly-welcomed.    

Here are some useful links regarding this issue:
http://biz.thestar.com.my/news/story.asp?file=/2012/2/16/business/10717078&sec=business
http://www.youtube.com/watch?v=F1yjB3M8SNM&noredirect=1
http://www.cimbbank.com.my/index.php?ch=cb_per_st&pg=cb_per_st_inv&ac=12&tpt=1#