SITI outsourced its ICT services for multi-billion ringgit

Shell IT International Sdn Bhd (SITI), the global ICT service delivery hub of the famous petrochemical conglomerates, is one of the pioneer tenant in Cyberjaya and provides thousands of job position for the ICT personnels around the area.

Last week, they announced a multi-billion ringgit outsourcing plan for the provision of its IT infrastructure and telecommunications services in 3 service bundles, starting July 1, 2008, to the 3 global IT and telecommunications suppliers namely AT&T, EDS and T-Systems. EDS has entered Cyberjaya with their own building for quite some times, while the other 2 are expected to enter into Cyberjaya in the near future following this deal with SITI.

AT&T will be taking care of SITI's network and telecommunications functions, while EDS handling their end user computing services including desktop, back-up and disaster recovery, and T-Systems looking after their hosting and storage.

My friends working in SITI informed that both their permanent and contractual staff have seen to be transferred to the outsourced company, and still working normally in their usual workplace. This is a very good arrangement as their job is not affected so much. Probably they have better career path too, as there will be opportunity to serve other global customers of their new employer.

All in all, this move is seen to be beneficial and is a win-win to everyone. In long run, following the presence of AT&T and T-Systems in Cyberjaya, there will be more ICT job opportunities in this MSC region. It was heard that EDS will expand their workforce in Cyberjaya after this deal too.

Is the car loan interest of 3% cheaper than house loan interest of 5%?

Many people are not aware that the interest calculation for car loan and house loan is different, so they cannot be compared directly figure by figure. If we compare the figure directly, is the car loan interest of 3% cheaper than house loan interest of 5%? You'll say 3% is definitely lower than 5%, right? However, the fact might be the other way round. 3% could be higher than 5%.

Let's do some calculation:

The total interest payable for a car loan of RM100k with interest 5% over a period of 9 years will be RM45,000. The monthly installment is RM1,342.60.

The total interest payable for a house loan of RM100k with interest 5% daily compounded over a period of 9 years will be RM24,439.20. The monthly installment is RM1,152.21.

The difference between the 2 calculations above is significant. Why? This is because car loan is calculated based on simple interest formula, and house loan is calculated based on amortized compound interest formula.

The formula for simple interest is straightforward, which is:

Interest = Principal x Rate x Years

What would be the car loan interest equilvalent to a house loan interest rate of 5%?

24,439.20 = 100,000 x Rate x 9
Rate = 2.72%

As a result, the above house loan interest rate of 5% is equilvalent to a car loan interest rate of 2.72%.

Is the car loan interest of 3% cheaper than house loan interest of 5% for the scenario above? The answer is obviously NO! However, there could be situation of the anwer to be yes too, especially when comparing a house loan of 30 years with a car loan of 9 years.

Here are some simple references for you:

For a 5 years 100k loan (the period where most people will take for car loan):
House loan interest of 4% = car loan interest of 2.10%
House loan interest of 5% = car loan interest of 2.65%
House loan interest of 6% = car loan interest of 3.21%
House loan interest of 7% = car loan interest of 3.77%
House loan interest of 8% = car loan interest of 4.35%
House loan interest of 9% = car loan interest of 4.93%


For a 9 years 100k loan (the maximum period for car loan):
House loan interest of 4% = car loan interest of 2.14%
House loan interest of 5% = car loan interest of 2.72%
House loan interest of 6% = car loan interest of 3.30%
House loan interest of 7% = car loan interest of 3.91%
House loan interest of 8% = car loan interest of 4.53%
House loan interest of 9% = car loan interest of 5.16%


For a 30 years 100k loan (the period where most people will take for house loan):
House loan interest of 4% = car loan interest of 2.40%
House loan interest of 5% = car loan interest of 3.12%
House loan interest of 6% = car loan interest of 3.87%
House loan interest of 7% = car loan interest of 4.67%
House loan interest of 8% = car loan interest of 5.49%
House loan interest of 9% = car loan interest of 6.35%

What to look for in a flexible home loan?

Several years ago, flexible home loan was a new concept contrary to the conventional home loan, offered by limited number of bank only. By today, many banks provide their so-called flexible home loan facility to the market. There was a saying that the interest rate of flexible home loans is slightly higher than their conventional counterparts, but this is no longer true nowadays, with both having the same competitive rate.

If you are considering a flexible home loan, what should you look for to distinguish the genuine flexible home loan from the rest?

Here are the basic features that any flexible home loan should mandate:

• Your loan account should linked to a deposit account, such as a current account. You get consolidated statement report for both accounts in one.
• You deposit money into the deposit account, and your monthly installment is automatically transferred from there to your loan account.
• The interest is calculated from outstanding loan amount minus any excess money in the deposit account. In other words, any extra money you deposit can really helps to reduce interest payments, thus saving you the money.
• You are flexible to deposit more than your monthly installment in any amount, anytime, and as often as you wish.
• No notice required or fees charged for the extra payment.
• You have the flexibility to withdraw your excess payments whenever you need it in any amount, anytime you wish.
• No notice required or fees charged for withdrawal of excess payments.
• Withdrawal of excess payments can be done anytime by ATM or cheque facility.
• You can start your principal repayments immediately even if your home is still under construction, rather than merely servicing the progressive interest.
• You can request for an increase in loan amount, giving you a ready avenue for extra money.

Any home loan that does not have ALL the features above, should not be considered as flexible home loan. If the loan imposes constraint or limit to the amount of payment and frequency to the deposit and/or withdrawal of excess money, then it is not flexible enough.

Other than the above basic features, you should also look for the loan with:

• Low interest rate, of course.
• No monthly, quarterly or annually maintenance fee.
• No processing fee for application.
• Subsidised lawyer fee.
• Subsidised valuation fee.
• Low lock-in period.
• Low termination fee.
• Daily rest interest calculation where interest is reduced as soon as payment is made.
• EPF withdrawal to reduce loan outstanding.
• Loyalty bonus in the form of lower interest rates or money rebates for customers who keep the account for years.
• No compulsory to MRTA/MLTA offered by the bank.
• Convenient to make payment easily.

Although you could hardly find a flexible home loan with all the features above, you can always look for the one that offers the most.