I have a few auctioneer friends. They take their profession seriously. There are also many friends who buy mostly auction properties and have benefited a lot from it due to the potential for an extremely undervalued property being put up for auction. Another friend is now quite famous, as a speaker about how we can take advantage of auction properties. These auctions are normally conducted by an auctioneer and the environment is lively when the property being auctioned off happened to be an undervalued and attractive one.
Just a week ago, my good friend Stephen of MNP Auctioneers told me that e-Bidding which is being implemented for High Court of Malaya would kill 99.9 percent of all auctioneers. I do not really understand how this would affect the lives of auctioneers. Yesterday he forwarded a full length article which I think I should share with everyone. As they say, transparency is always the best. He has put forth his arguments, together with facts and figures and I think all stakeholders should read and perhaps make a stand. His full letter as below:
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PRESS RELEASE: E-Bidding, An Unjustified System that Lead to the Extinction of Licensed Auctioneers and Fair Bidding
Our most honorable “Bapa Merdeka” and the first Prime Minister of Malaysia, Tunku Abdul Rahman had mentioned in his proclamation of independence, “We remember too our association (with Great Britain); justice before law, the legacy of an efficient public service and the highest standard of living in Asia”. Great Britain also left us an important legacy – a democratic, fair, open and transparent way of selling, and that is “Open Bidding” (hereinafter called as Public Auction).
Auction Sales Enactment was created by the former straits settlement government in 1929, and it is still effective as at today. Many developed countries like United States of America and England still favor public auction, billions worth of items have been sold under the hammer. Australia uses properties transactions sold by way of auction as an indicator of real estate market performance. Public Auction in the Asian countries like China, Hong Kong and Singapore are very common and highly developed; numismatic, bank foreclosure, antique and government lands were sold under the hammer of the licensed auctioneers.
The effectiveness of public auction can be seen from its higher transacted price through vibrantly visualized competitive bidding, auctioneer cheering the crowd with convincing tonality, engaging audiences, non-stopped paddle numbers raising up and down, final calls, etc. Bidders are all competed under the comfortable, fair, open and transparent platform. No favoritism, no under-table but the highest bidder win! Every positive characteristics make auction a very meaningful formula of the equal and fair civilization process.
HOWEVER, with the recent shocking announcement and directive by the High Court of Malaya, licensed auctioneer will soon be a history of the past!
In a news by Malay Mail Online dated 8th January, Chief Justice Tun Arifin Zakaria announced that the e- bidding process will be launched to replace “manual” public auction process in the High Court of Malaya. It means to say, auction will be fully electronic and auctioneer service will be terminated. Almost 99% of the licensed auctioneers will be jobless. No more lively bidding, no more auction venue and no more exciting bidding be seen. Tun Arifin further said that with e-bidding, the bidding process will be more transparent as it will opened to more prospective bidders, and eliminate any syndicate which tends to interfere with bidding process which may lead to artificial pricing.
The High Court of Malaya may have possessed good intention, but terribly unjustified, unfair and inconsiderable planning. The implementation will cause serious impact not just to the auction industry but to all the Malaysians as well.
1) Based on the Internet Users Survey 2014 by Malaysian Communications and Multimedia Commission (MCMC), there are 33.4% non-internet user in Malaysia. With approximately RM30 millions populations, at least 10 millions Malaysians are not eligible to bid at e-bidding. Therefore it is contradicting the basic principle of law by setting inequality and discriminating rakyat with no computer literacy. It becomes “closed auction” and not publicly available anymore.
2) Section 257 and 259 of the National Land Code specified that “the sale to be by public auction”, whether e-bidding or e-auction is considered public auction has remain seriously questionable.
The sections also mentioned that the court officer shall settle summarily any question arising in the course of the proceedings. Will such right be logically take place, in the case of e-bidding? The High Court of Malaya may be planning to amend the law. But does it make sense? Public Auction has to be open and transparent. What transparency do we entitle when everything is controlled merely in the mount of computers and internet with just a finger click? I seriously suspect that e- bidding is illegal as it is confronting National Land Code.
3) The whole e-bidding system was launched without the High Court of Malaya conducting any survey nor seeking any feedback and opinion from relevant parties such as solicitors, financial institutions (plaintiff), potential auction bidders and especially auctioneers. Not even the functionality, technicality and receptiveness have ever being tested. Take Goods and Services Tax (GST) for example, it has been debated for several years since 2005’s Malaysia budget. Malaysia has intended to implement GST on January 1, 2007 but it was delayed on February 22, 2006 due to political issues and readiness issues. It was eventually implemented on 1st April 2015 and GST rate is fixed at 6%. Any public policy will need to go through years of testing period before it actually take place, it may even be set aside if it has more pros than cons to Rakyat.
4) There are many uncertainties in any electronic devices and the borderless world of internet, the supposingly-natural results of a competitive live or floor bidding may at anytime be CHANGED by the speed of internet and system issue. There is no one to be blame, as like it or not there will be many system disclaimers that potential bidders have no choice but to agree if they choose to bid.
5) By implementing e-bidding, 99% or thousands of licensed auctioneers will be jobless, not including the sources directly or indirectly related to the profession, such as employee and sub- contractor.
6) Many Malaysians are generally either skeptical or shy away from auction. Based on my experience, at least 70% people have no literacy in auction. It is a very bad idea to introduce e-bidding without general public knowing anything about auction in the first place. Potential bidder will understand more about auction by attending to a traditional live auction as an observer, but such platform will become extinction after being replaced by e-bidding.
Another end-of-the-world disaster to licensed auctioneers is the illogical directive that announced by the High Court of Malaya recently. It requires compulsory for auctioneers to submit Sijil Pelajaran Malaysia (SPM) certificate with credit scoring in Bahasa Malaysia, English and Mathematic, with age limit below 60 to be eligible to practice in High Court. This directive alone already caused at least 80% Penang auctioneers becoming jobless. Those left out are the auctioneers with much higher academic qualifications than SPM and with many years of excellent track record in conducting high court auction. A licensed auctioneer who is a Justice of the Peace (JP) was also rejected due to no SPM certificate. High Court of Malaya is putting SPM ahead of many higher qualification, a truly discriminative directive while unbelievably issued by the highest judicial institution and gatekeeper of law of the country.
None of any developed country has implemented full e-bidding, as traditional live auction is still the most relevant and effective method of auctioning. It is especially necessary for real estate auction that involves easily hundreds of thousand if not millions worth of value to take place at floor or live bidding platform, to enhance confidence of bidding. Buying a mobile phone using online marketplace is totally different than purchasing a real estate property online. There is no refund after bidding successfully!
￼￼￼￼￼To increase competitiveness of auction bidding, many auction houses in the developed countries has incorporated online bidding function together with live or floor auction. Simply speaking, in one auction fair, a bidder can choose to turn up and register to bid at a live auction event. Or, he or she chooses not to appear while register to bid at the same auction event with online platform. This methodology is extremely important as it provides CHOICE, a democratic procedure of a civilized country. In Malaysia, this method was first adopted last year August in an auction of Malaysian Banknotes with Special Serial Number that held in Sasana Kijang, Bank Negara Malaysia. It is an auction system called BEST2BID – live and online auction run concurrently. I strongly recommend that this is the only solution to be adopted by the High Court of Malaya, and not fully e-bdding.
As a professional auctioneer, we emphasize that an open, fair and transparent live auction conducted by licensed auctioneer is strictly obligatory in a judicial auction. The High Court of Malaya’s Full e-bidding system should be dropped AND the discriminative directive on the submission of SPM certificate and age limit of 60 shall be cancelled immediately.
Managing Director, MNP Auctioneers (Central) Sdn. Bhd. Chairman, Penang Auctioneers Association