A long standing problem with Ah Longs...

and how to cut a long story short... no, it should be how to cut short the Ah Longs’ long arms from reaching the population mass:

Two weeks ago,

Thursday June 4, 2009
The Star: Reel in the loan sharks (excerpts):
ALONG THE WATCHTOWER
By M. VEERA PANDIYAN

Through the ages, as man progressed through moral, ethical and spiritual consciousness, usury – the practice of lending money for profit at exorbitant interest – was condemned as an abomination as evil as rape or murder.

It was prohibited by the tenets of all the major religions, including Hinduism, Judaism, Buddhism, Jainism, Christianity and Islam.

But over the past few hundred years, it has come to be accepted. It is now interpreted as “interest that is way above legal or socially acceptable levels”.

In Islam, however, usury (riba) remains forbidden.

Last week, Malaysia made headlines around the world for yet another ignominy. Three men who had borrowed between RM1,500 and RM4,000 from Ah Long were found shackled by their feet and neck and chained to the wall inside two six-by-seven metre prisons.

In between beatings, they were given tap water and a few slices of bread a day, which they had been eating beside open toilets to survive. They had been in the cells for between 17 days and two months before police rescued them.

(I wish to add that some actually target attractive women and even prefer to get sex in return for settlement of the small debts. One pleading debtor was even advised to rob, ‘surely there must be some houses where nobody is in’! So, if a loan shark shows signs of being religious, you know he is a big hypocrite.)

Their quarry may be hardened crooks and likely members of merciless triads but the cops opted for a gentle approach, giving the loan sharks a 24-hour “grace period” to surrender.

My, what trust they have in such people and if I may add, what grace, in spite of the pressure they should really be under.
Our level of cynicism can only rise, especially when top police officers declare that they know the identities of the loan sharks and threaten to make their pictures public if they don’t come forward to give themselves up.

Let’s remind the cops one more time: Malaysians have become way too weary of listening to we-will-not-hesitate-to-act” statements.

Enforcement is a word with a simple meaning. If you know who they are, just nab them and charge them.

Illegal money lending is a crime. Whether the borrowers are irresponsible gamblers or desperate people who need money, is not the issue.

The pith of the matter is, Ah Long are raking in millions at the expense and misery of others through criminal means.

With the economy in recession, more people are likely to end up as loan shark bait, especially those involved in small businesses and facing problems in dealing with the banks.

Already, Ah Long are literally holding the ATM cards of many Malay- sians caught in dire straits.

These monthly wage earners have surrendered their cards as collateral for loans and come each payday, the Ah Long will withdraw payment and interest before dishing out whatever is left to the card owner.

Those under the Ah Long’s clutches include civil servants and factory workers. With so little money left for their families, there is little hope for such people to crawl out of debt.

Bernard Khoo has his way of suggesting to Hishamuddin in his blog:
zorro-unmasked: Just don't talk cock Hiss!

While fugitive Raja Petra gave a simple advice to Hishamuddin in his article:

Malaysia Today: No need to go to the ground, Sham, just talk to Sanusi

I have written about the problem of Ah Longs a month or so ago. In that piece I mentioned that about 30 years or so ago the Malay Chamber of Commerce did a study to assess the impact of Ah Longs on small-scale Malay businesses. The study was done in the small fishing town of Dungun in Terengganu.

What we found out was that nearly every Malay petty trader and fisherman in Dungun borrowed money from Ah Longs. The rate of interest they paid was 4% a day. So, for every RM1,000 they borrowed, they had to pay RM40 per day.

Every day, the Ah Longs would send ‘runners’ to collect RM40 from the petty traders and fishermen for every RM1,000 they borrowed. That’s all they had to pay, RM40 per day for every RM1,000 borrowed. The runners were not interested in collecting the principal. They just wanted the interest. The petty traders and fishermen can go on owing on the principal as long as they paid the RM40 for every RM1,000 they borrowed.

This meant the petty traders and fishermen would continue owing the Ah Longs the money they borrowed for the rest of their lives. And the Ah Longs would in turn continue collecting the interest without touching the principal for the rest of their lives. It was like making a pact with the devil. The devil owned you until the day you die and long after you have entered your grave when your family would then have to take over your debt and would have to continue servicing the interest on the never-never.

This matter was brought to the government’s attention but nothing was done about it. And that was 30 years or so ago.

Tan Sri Sanusi Junid can relate a similar story that involved him even earlier, about 40 years or so ago. At that time he was with the Chartered Bank. And the story goes as follows.

Sanusi had tendered his resignation and his Mat Salleh boss called him and asked what it would take to get him to withdraw his resignation and stay with the bank. Sanusi replied that if they gave him a few million Ringgit (equivalent to hundreds of millions today) to lend to the Kedah farmers under a special loan scheme then he would probably stay with the bank.

What Sanusi had discovered was that nearly every Kedah farmer owed money to the Ah Longs and were paying an exorbitant rate of interest just like what the petty traders and fishermen in Dungun were subjected to. The interest came to about 100% per year, which is still comparatively lower than the Dungun rate of interest, which was more than 100% per month.

The Chartered Bank agreed and Sanusi arranged for his officers to go down to the padi fields on motorcycles to look for farmers to lend money to. Eventually, they managed to disburse the money to all the farmers and free them from the clutches of the Ah Long.

Sanusi did not make press statements saying that he was ‘going to the ground’. He just got the bank to agree to give him a few million Ringgit and then he sent his officers into the padi fields to search for farmers in debt. They then gave the farmers loans so that the Ah Longs could be paid off in full and the farmers could be free of the blood-sucking rate or interest.

I suggest Sham just contact Sanusi and get Tan Sri to agree to become an adviser to the government. Sanusi has been handling this problem while Sham was still not wearing any underwear, so he knows what to do. Then set aside RM500 million or so under a special loan scheme to help fishermen, farmers and petty traders escape from their debts. Just go buy off their debts from the Ah Longs.

Even if the government has to finally write-off some of this debt it would still be worth it. If we can spend RM300 million a year on the Terengganu Monsoon Cup and a further hundreds of millions on F1 racing, bicycle races, Merdeka Day celebrations, Prophet Muhammad’s birthday celebrations, and whatnot, what is wrong with writing off RM100 million a year on a more worthy cause?

Raja Petra’s suggestion is most effective in cutting down the size of the Ah Long businesses but it does not solve the root of the problem. It will be just another quick fix by the government if the people refused to change their spending habits. I can understand those in the hardcore poverty group who will find it an enormous task getting out of the poverty trap. A low-interest loan to replace an existing evil loan will be like godsend to them.

The next problem would be ‘how to define and decide who should be entitled to such special loans?’ We have seen very often, whether in the case of low cost units or just about anything where the demand far exceeds supply, hanky panky can be found.

On people’s spending habits, I have found, for example, a former rich man’s wife living as a single mother (husband absconded to avoid ah longs), who had Astro and broadband subscriptions when she was still living in a rented government flat! Just to show how people prioritise even in times of hardship. As a comparison, at the time I was still using tmnet, did not and still do not have Astro and air-conditioners. If I were asked to help, how would I feel?

For a long-term solution, education has been proven effective in raising the standards of living by putting them in the executive and professional levels.

I would also suggest that the Inland Revenue and the Local Government Ministry (surprise, surprise, for being responsible for the money lenders’ licences) should look into their finances. Had the licensed moneylenders been responsible in keeping to their reasonable rates, they would not be able to gain exceptionally from their business.

If, for example, someone with Rm100,000 capital, was able to buy a few properties after a few years, he is likely to have been charging exorbitant rates, and also, likely to have under-declared his high incomes, which is where Inland Revenue should come in. The IR would have to decide when faced with the unlikely illegal earnings declared (as in interest from exorbitant rates) whether to treat them like earnings from prostitutes in the unlikely event they are declared!