In the ASSET VALUATION GUIDELINES SC-GL/AV-2009 (R1-2017) issued by the Securities Commission that was 1st Issued on 8 May 2009 and revised on 19 January 2017, Clause 1.07 titled `Compliance with other guidelines and valuation standards’ it states ad verbatim that
`Valuers must also ensure compliance with the Guidelines on Due Diligence Conduct for Corporate Proposals and other relevant guidelines issued by the SC, valuation standards issued by the Board of Valuers, Appraisers and Estate Agents, Malaysia (Board) and other valuation standards issued by recognised professional bodies, where applicable’.
Clause 1.06 spelt out the consequences for failure in complying.
In the International Valuation Standards (IVS) effective from 31 January 2022 issued by the International Valuation Standards Council, in its Chapter titled Introduction in Page 2 point 3 sub titled `Development and Revisions of Standards’ it states ad verbatim that `Standards are to be created and revised, when necessary, by way of a transparent process after appropriate exposure’.
So when a government valuation property expert told the High Court that she disagreed that the extrapolation method of calculation in calculating returns is not against the Malaysian Valuation Standard (MVS), it raises questions about the MVS and its relevance.
Item 2.0 STATEMENTS OF STANDARD in the MVS under the section `Other Methods of Valuation’ clearly states that -`When other approaches or variations of and to the above stated methods are applied these must be fully explained and the data used in the valuation must be substantiated by evidences of sales of comparable properties compiled, analysed and kept by the Valuer meaning established and reliable data.
Thus, the extrapolation method of calculation, which the government valuation property expert claimed she used to estimate returns in valuation where it uses estimates and values outside the known data range, which are viewed as unreliable and subject to greater uncertainty can be considered as against the Malaysian Valuation Standard (MVS).
This raises a question which the ordinary rakyat is asking – are expert judgment always reliable and trustworthy?
Moreso in the above case where the expert is disagreeing on a standard of a government regulated entity?
Just like the beginning of the Covid 19 pandemic.
Experts recommended against the wearing of face masks early in the crisis only to reverse their judgments a few months later, without any new evidence to support this change of mind.
No one questioned why should we think that they have got it right this time around.
Should this question be settled by The Valuation and Property Services Department (JPPH) and the Securities Commission, - on the assumption that the claimant is a public listed entity who has assumed full ownership of Semantan Estates - both of which are entities under the Ministry of Finance.
That a standard that is generally not acceptable and conforms to the MVS is used to estimate the value of the asset?
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