Friday Sep 14, 2013

"I don't trust you," Khin Khin said to Felix. "So, I ask Dr Sing to be involved."

I was not keen on being involved in international property development between a Singaporean group known only to Freddie and Khin Khin's Myanmar group which provides the land. Felix is a businessman with the quadruple bypass and  does not reveal the name of his group, only saying that it is a big group with interest in Myanmar property development in large projects. This project was around US$40 million. Khin Khin could see the big money in commissions but I don't know the credibility of the people involved. There was Felix as the front man and he had told Shirley not to get me involved.

Khin Khin is an employment agent but she has her Myanmar contacts looking for Singaporean investors and joint ventures.

"This project is a BOT," I said to her. She did not understand.
"BOT means Build, Operate and Transfer," I am a licensed realtor and so she sought my involvement. "In BOT, the Singaporean party will use his money to build and manage the project for 50 years + 10 + 10 as in the agreement. After that the whole business belongs to the Myanmar party. During the management of the operations, the Myanmar party gets a share of the net profits."

This was a second Myanmar development project from Khin Khin to Felix. The first project was a piece of land for building a condominium and Felix's party was involved and had gone to inspect the site. Felix had given Khin Khin the architectural plans to forward to the Myanmar party when she went back to Yangon last month. "I threw the plans into the waste paper market," she told Felix when she came back to Singapore. "The Myanmar party did not bother to see me to take the plans." Her philosophy is not to beg her countryman by going to the office to submit the plans. I would say that this is not the right thing to do, but she did it.

"I don't like begging the rich people for favours as I have to go out with them for their personal matters," she said to me as I sent her to the airport Terminal Two on Sunday Sep 16, 2013 at 5.30am to go back to Yangon. Some Myanmar businessmen will ask her out for dinner repeatedly to talk business but she would not go.

"How is the rich people going to be rich if they don't get free favours of time or tasks from others?" I asked her as she kept saying that I do not understand Myanmar culture and way of doing business.

"Singapore also has cunning businessmen who cannot be trusted too," I said. "If the rich people pay you for services, then they lose a bit of their wealth. This does not sit well with them. It is the ordinary average person who pays you for services done. But in this networking, the rich person will return you favours since you have helped them and they don't charge you! The rich people has their powerful connections whether they are Myanmar or Singaporeans and one word from them may help to resolve your problems. But you don't want to socialise with them by accepting their dinner invitations in Yangon, so don't get involved in international property investments. You may get zero income after spending so much time."

A formal written agreement to share the commissions must be done. "Felix would have told you that you would just get a referral fee," I asked her. "Not a sharing of the commissions. A referral fee of a thousand dollars for a US$40 million project."

"Yes, he said that," Khin Khin confirmed.
"That is why he did not want me involved. He does not want you to get your share of the commissions."

Since Khin Khin asked me to get involved, I asked Felix what this Singaporean group would be paying in commission.

"1% of the land value," he said solemnly. "This is the standard practice. Some developers don't even pay any commission."

"1% of the land value at US$20 million?" I was sure this was not the standard practice.
"Yes," he said.
I was sure that Khin Khin's Myanmar group would not accept this amount and so I phoned the agent after getting Khin Khin's permission.
I told Felix "It should be 5% of the project value which is US$40 million. Negotiable. Certainly if your group wants just to pay 1% of the land value of US$20 million, then don't proceed."

Felix phoned the Myanmar agent directly after Khin Khin told him that 2-5% is the industry's practice. This figure was given to Khin Khin by me and since Felix phoned her after I had spoken about 5% negotiable, Khin Khin revealed the figures. Although she had asked me to deal directly with Freddie, she undermined me by revealing the 2-5% figures. So, how could Freddie respect her?

Felix told her arrogantly that his party would proceed to inspect the site and would decide later. He by-passed her by direct communication with the Myanmar agent.

"That is what happen when you sound desperate and reveal your contact's telephone number and email to Felix, a person you can't trust. He is a businessman and takes your allegations about his lack of integrity with a smile. For him, it is the money from the commissions that matters, not your explanations as to why you want me to be involved. Now you have revealed your source, he just phoned directly and by-passed you."

The Myanmar agent had told her that Felix phoned him and emailed him directly. No copy of the email was ever given to Khin Khin. Property deals are big money and there is a lot of trickery involved in depriving the agent of his commission. In this case, Khin Khin is not redundant as she has the trust of the Myanmar agent. For Felix, it is the closing that counts. If Khin Khin can't deliver, he just deal directly. After all, he has the Singaporean group with experience and money. It appears so simple. Or is it?