By Samantha Joseph
Tiger is a more than a little suspicious of the intentions of the umbrella body for cooperatives, Angkasa. By directly appealing to the prime minister to extend the personal loan repayment period for civil servants again, they are really showing their stripes – not the lovely unique ones Tigers have, but dollar-sign ones.
While living in somewhat close quarters with humans (not that Tiger has a choice since most of his territory has been turned into a concrete jungle), Tiger has noticed a propensity for them to be pointing out the obvious and treating it as if it were the very plague (like rabies).
Here is a fine example. When Bank Negara Malaysia came out with the grand idea (and indeed it is grand and practical) of reducing the length of personal loans from 25 years to ten years, and requiring the non-bank financial institutions (NBFIs) to include housing and car loans in their 60% salary calculation for loans, Koperasi Jess Johor fussed that this would reduce the number of people who took loans.
You don’t say.
Was there an expectation that these regulations would magically increase the take-home salary of all those who take loans from co-operatives? That it would encourage more people to take loans instead of ruminating on their personal debt and considering that maybe they shouldn’t dig the hole they were in any deeper?
Actually, Tiger is not really surprised. The former is unlikely to happen. The reason why BNM was forced to implement the measures in the first place was that both lenders and borrowers had no sense of financial responsibility.
It seems we are all animals in the face of greed.
Abdul Fattah Abdullah
Recently, Angkatan Koperasi Kebangsaan Malaysia (Angkasa) president Abdul Fattah Abdullah said this in his appeal to review the loan length from ten to 15 years: “The review was important to safeguard the welfare of civil servants who will be financially burdened by the reduced repayment period.”
Tiger would like to ask if the ‘welfare of civil servants’ (which is surely foremost in every non-bank financial institution’s or NBFI’s mind) would be much better protected by an authority (e.g. BNM) that doesn’t rely entirely on their indebtedness to survive.
Tiger would also like to point out that the idea of civil servants being ‘financially burdened by the reduced repayment period’ is a pretty obvious result. It is exactly the result BNM is intending, so that people will think twice before applying for loans so that they won’t be ‘financially burdened’ by taking out loans that they can’t afford in the first place.
Essentially, what it sounds like Angkasa is asking BNM to do is to allow more civil servants to become indebted for their profit. This is in fact what Abdul Fattah said: “It will also affect the business of cooperatives as a business entity because the number of applicants for loans will be reduced.”
Yes, Angkasa. Thank you for pointing out the obvious so eloquently (again), and at the same time, completely missing the point as to the reason BNM even introduced these measures in the first place.
Tiger would like everyone to be a little more realistic. Yes, cooperatives through Angkasa give loans. No, they do not give loans because they care about the civil servants who were in the spotlight for over-extending themselves financially when news of our personal debt levels broke. Yes, Malaysia has a wealth inequality problem. No, taking loans will not fix the problem.
Perhaps Angkasa did start out that way; as an accessible and centralised option for civil servants to deduct their salaries on a regulated schedule to pay back loans. Perhaps at one time the priority was the civil servants and how to make repayments easier for them.
But from what Tiger hears (and Tiger has good hearing), it sounds a lot more like Angkasa is prioritising the co-operatives over those who are using their facilities to repay loans. This would explain why they are so concerned about the number of loan approvals rather than the fact that for once, people will be obtaining loans that are suitable to their income level.
In an article from a Malay paper, Abdul Fattah encourages the move to increase the loan length term as it will ‘increase competition among the cooperatives who mainly give loans to civil servants that qualify’.
Were ‘qualified’ taken to mean incomes that could comfortably support a house and car loan along with repayments for a personal loan, then BNM’s steps could be seen as unnecessarily rigid.
When ‘qualify’ means a gross income of RM700 and a blind eye to blacklisted applicants, Angkasa and the co-operatives aren’t doing anyone any favours.
If Angkasa has 389 credit cooperatives under it, and is worried they will not be able to survive if the consumer pool shrinks, maybe the time has come that they learn a bit about competitiveness instead of expecting the government (in this case appealing to the prime minister who apparently gave a favourable response) to make things easier for them at the expense of the larger population.
GRRRRR!
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