Taking a loan is fine, but if you can’t pay back your loans ...

HAVING gone through a few recessions and occasional global financial crisis in my lifetime, I have seen enough suffering by genuine business owners and their families.

When the going gets tough, the banks call in the loans and their cash-strapped business just fold up. The bank will then sell their pledged collateral and sue them till they are declared bankrupt. Standard operating procedures (SOP) for the bank and sobbing by the poor chap.

Then you have property speculators and big-time stock market manipulators bankrolled by greedy bankers until the bubble burst and the market crash. All hell will break loose as all parties scramble to damage control mode. The cash rich speculators will survive but the bankers always end up with having to take an unwanted haircut. High margins come with high risks. Fair game.

To get a loan, small businessmen have to charge to the bank whatever properties they have as collateral. At all times, they have to sign a personal guarantee too, just in case the bank cannot fully recover their loan sum from the forced sale of the property.

Unless you are someone special with VVIP status, the bank will come after you. Trust me, bankers are sticklers to SOP and they will make sure your name appear in the classified pages for bankruptcies if you don't pay up.

So, I am sure everyone is watching with great interest the latest promise in parliament by our Agriculture and Agro-based Industries Minister on the full recovery of the RM250mil loan from the National Feedlot Corp.

It looks like there were no properties charged to the Government as the 600ha in Gemas was leased from the Negri Sembilan government for RM200,000 a year and the condominiums were bought with the loan money. Did the borrowers provide the Government with any personal guarantees?

As with all loans, recovery of the loan sum will start with a demand letter saying that the bank/government is recalling the loan and you are given three months to pay back in full, principal sum with interest. Or else they will take you to court and sue you. Once they get judgement against you, the court will appoint a liquidator to salvage whatever assets you have and sell whatever cows and bells left to any interested cowherd with a big haircut. If you have signed a personal guarantee, you will be a bankrupt. Nothing personal, just SOP.

Now you are really on your own, with nobody to turn to. All your so-called friends are avoiding you like the plague. What can you do?

As an experienced restructuring expert and part-time lipstick salesman, my advice to you is not to hire sleazy advisors to solve your problems or you will end up suing him for unsatisfactory service levels filled with lies and empty promises.

There is no bypassing the SOPs. When the shit hits the fan, it is every man for himself. You still have to pay back... in full. Stay calm and meditate and God will show you the way.

First step is to look for a friendly tycoon who can buy over the cow business for RM250mil in the name of national interest. It is only petty cash to the tycoon but it will blend in nicely into his portfolio of staple food businesses.

Do not worry if nobody wants to talk to you now because the concerned ministry is already talking to a few parties for a friendly takeover. Maybe an attractive haircut might work.

If the first step doesn't work, I suggest you take the next step with caution. You can borrow RM250mil from Ah Longs but make sure you pay the high interest rates or your house will be splashed with red paint and your neighbours will know about your non-payment. That would really be embarrassing.

Ok, maybe that was a wrong step to recommend. As a last resort, when in court, plead ignorance, blame everybody else for your ills. Be a man like William Hung, admit you have no experience and you did not know a bull from a cow. Since you have not signed any personal guarantees, they will only take whatever is left in the company which should be fine with you. It was never yours in the first place.

My simple advice to entrepreneurs who need bank loans to expand the business, make sure you treat the approved loans with utmost respect. The loan officers have put their heads on the chopping block when they recommended your loan application.

If you failed them due to mismanagement and misinformation, you can bet your last dollar they will come after you and make sure your next four generations will continue to pay your debt.

Oh yeah, another piece of an advice. Do not wear V neck pink t-shirts when you meet your bankers. Just play it straight.

There are just too many issues raining down on our heads nowadays and we do not need another downpour.

ON YOUR OWN
By TAN THIAM HOCK

To access earlier articles of On Your Own, log on to www.thiamhock.com. Honest comments welcomed and approved.

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Ten Point Plan For Social Entrepreneurs to Change the World
Money talks or advice?

Ten Point Plan For Social Entrepreneurs to Change the World

Devin Thorpe, Forbes Contributor

Using social entrepreneurship or impact investing to leave your mark.

Here it is:

1.  Save every penny.  Social entrepreneurs as a general rule can make a bigger difference with less money than entrepreneurs without a social mission.  Scrimp, save and devote your own resources to your cause.  Whether your venture is for profit or not, start with putting your own money to work with you.
2. Keep your day job.  One of the key lessons I learned while writing Your Mark On The World was how much impact one person can have if the money she raises for her venture doesn’t have to go to paying her living expenses.  Steven Dee Wrigley, about whom I posted a few weeks ago, is a great example.  He’s a social entrepreneur who works nights to fund his day-time charitable work.  You won’t keep that job forever, but keep your job as long as possible; let your current employer help fund your new gig.
3. It won’t be easy.  If you are going to change the world, it won’t be easy.  Get that notion out of your head right now.  The idea may be simple, but that is only likely if the problem is huge and others have deemed it impossible.  For instance, it makes no logical sense that 1 billion people in the world are hungry when there is ample food available.  Solving that problem is proving not to be as easy as it would seem.  I’m confident that you won’t quit just because changing the world is hard.
4. Start Something That Matters.  Blake Mycoskie, founder of Toms, the shoe company that gives away a pair of shoes for every pair someone buys, wrote an inspiring book that gets at the heart of social entrepreneurship.  His book’s title is the message:  Start Something That Matters.  It may be harder to find something that matters and much harder to figure out how to pull it off, but if it doesn’t matter, it isn’t worth your time.
   
   Blake Mycoskie at SXSW 2011 (Photo credit: eschipul)
5. Focus on social issues.  There is money to be made, if that’s what you’d like to do, even when tackling big social problems.  The Tom’s model of social entrepreneurship has created a movement around the concept of “one for one.”  Countless businesses now offer products and services for sale on that basis.  Worldhaus is a for-profit venture that is creating homes for the market  of a billion or so people who don’t have a safe place to live but who can afford a $2,000 or $3,000 home.
6. Make it great.  All the marketing hype in the world can’t make something that doesn’t matter, that isn’t great or that doesn’t change the world into something that lasts.  Your impact will be tied to your ability to create something that grows beyond you, that exceeds your involvement and creates change.  Focus on your product or service.  You can only hope to change the world by bringing a zealot’s passion to your deliverable.  Anything short of that is likely to leave your audience underwhelmed.
7. Build a team.  If you can’t assemble a team of followers who will throw their lot on with you—not people you’re paying (at least not well) but people who are investing their time and energy along with you, you’ve either failed to create a compelling idea or you’re not a compelling leader.  A great team is early evidence of a great product or service and a great leader.
8. Use crowdfunding.  After you’ve exhausted your own ability to fund your venture, use crowdfunding to raise the money you need for your projects.  With each effort at crowdfunding, you can build an audience of followers and fans who will support each new project.  Don’t think of crowdfunding as something you do once and then forget it.  You can find a list of crowdfunding resources here (be sure to see the comments for more ideas).  In 2013 you will even be allowed to raise equity for your for-profit ventures using crowdfunding.
9. Have an impact.  With a team, a passion, and a product greased with funding, you are ready to actually have an impact, to make a difference.  Focus on action that leads to results. The more you actually achieve with your resources, the more likely they are to compound.  Whether you have a high impact, for-profit social venture or a nonprofit , focus on the difference you make.  By measure and reporting on your impact, new customers and supporters will come out of the woodwork to make your social enterprise grow.
10. Change the world.  Once you demonstrate your impact, you can grow your enterprise to have world-changing scale.  You won’t measure your results in profits, even if you make them.  That’s not what you’re about.  You’ll measure your impact in the ways you’ve made the world a better place.  Changing the world is its own reward.  Making a living at it is a bonus.

This ten point plan won’t appeal to as many people as the last one.  I recognize that some people were disappointed to read my last list when they recognized that it was meant to be funny and was not meant to be real advice.  (I just hope no one bought an Italian sports car before they figured out I’d meant that as a joke!)  If you’re still reading, I’m hopeful that you’ll join the community of people focused on leaving a mark on the world.

One final note: I don’t ever remember a time either in my life or in history when the world’s wealthiest were more committed to philanthropy and solving social problems than they are now.  The Forbes 400 Issue this year was devoted to the social good the Forbes 400 are doing.  More power to them.

My Ten Point Plan to Get Rich Quick as an Entrepreneur Devin Thorpe Contributor

10 Reasons To Stay At A Job For 10 Or More Years David K. Williams Contributor

It's A Dirty Business: The Green Entrepreneurs Who Create Treasure (And Profit) From Trash Cheryl Conner Contributor

The Real Reason The World Will Remember Bill Gates (Hint: It's not Windows 8) Devin Thorpe Contributor

I’m launching into more research about crowdfunding to write a book about best practices for social entrepreneurs.  If you have a connection to crowdfunding, please click here to share your wisdom.  I’m sure my research will also lead to more posts on that topic here on Forbes.

Please share your thoughts in the comments below, at my site, yourmarkontheworld.com, on Facebook, or @devindthorpe.

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Malaysia is a Secular state or an Islamic country?

There are some law issues being argued of late, among them like Secular state and Islamic country, etc. Shad Saleem Faruqi Professor of Law at UiTM clarified that:

Secular state:

De facto law minister Datuk Seri Nazri Aziz crossed swords with DAP’s Lim Kit Siang over the latter’s claim that Malaysia is a secular state.

The law minister correctly pointed out that nowhere in the Constitution is there any mention of the word “secular”.

Further, as Islam is recognised in the Constitution as the religion of the federation, it would be improper to regard the country as a secular state.

In support of this view, one can point out that the word “Islam” is mentioned at least 24 times in the Constitution, the words Mufti, Kadi Besar and Kadi at least once each. In Schedule 9, List II, paragraph 1, state legislatures are permitted to apply Islamic law to Muslims in a variety of civil areas.

The state legislatures are also permitted to create and punish offences by Muslims against the precepts of Islam except in relation to matters within federal jurisdiction.

Syariah courts may be established. Under Article 121(1A), syariah courts are independent of the civil courts.

On the other side, Lim correctly pointed out that Malayan constitutional documents and pronouncements by early leaders indicate that at its birth the federation was meant to be a secular state.

To back this view, one can point to the Supreme Court decision in Che Omar Che Soh’s case that although Islam is the religion of the federation, it is not the basic law of the land.

Article 3 on Islam imposes no limits on the power of parliament to legislate contrary to the syariah. Islamic law is not the general law of the land either at the federal or state levels.

It applies only to Muslims and that too in limited and specified areas. It is noteworthy that non-Muslims are not subject to syariah or to the jurisdiction of the syariah courts.

Islamic country:

Ever since Tun Dr Mahathir Mohamad’s declaration on Sept 29, 2001 that Malaysia is an Islamic country, this debate ignites periodically and no firm conclusion is ever possible because of the problem of semantics – the assignment of different meanings to the words “secular” and “theocratic” by participants in the discourse.

My personal view is that if by a theocratic state is meant that the law of God is the supreme law of the land and that the temporal ruler is subject to the final direction of the theological head, then clearly Malaysia is not a theocratic state due to the presence of a supreme Constitution and the overriding power of secular authorities over the religious establishment.

At the same time if by a secular state is meant that law and religion are separated from each other; that there is no legally prescribed official religion; that religion is not interwoven into the affairs of the state; that no state aid is given to any religious creed; and that religion is left entirely to private establishments, then Malaysia is certainly not a secular state.

Then how should we be described? It is submitted that the Malaysian legal system is neither fully secular nor fully theocratic. It is hybrid. It permits legal pluralism.

It avoids the extremes of American style secularism or Saudi or Taliban type of religious control over all aspects of life. It walks the middle path. It promotes piety but does not insist on ideological purity.

Muslims are governed by divinely ordained laws in some fields but in others their life is regulated by Malay adat and by secular provisions enacted by elected legislatures. Non-Muslims are entirely regulated by secular laws.

In sum, the secular versus theocracy debate is full of semantics and polemics and will take us nowhere.

Reflecting On The Law By Shad Saleem Faruqi

> Shad Saleem Faruqi is Emeritus Professor of Law at UiTM.

Related post: Malaysia a transit point for terrorists or a terrorist recruitment centre?