Money lost under the shadow banking: loan sharks Ah Long

IN my previous article, I shared the impact of high credit card interest rate that many have overlooked and hence, overspent. Interestingly, there are loans outside the confines of financial institutions that affect the mass. These loans are largely unregulated and therefore, more painful in terms of financial burden and emotional stress when the loan and interest cannot be repaid on time.

Every now and then, I will receive text messages from unknown contacts offering loans at “attractive” rates. A check with my close associates indicates that I am not alone in receiving such messages. These messages and those stickers offering loans on the streets share the same traits, i.e. easy loan with no pre-qualification required. Example – “Borrow RM1,000, and return RM200 monthly for six months”.

At first glance, it seems like the interest rate for the loan is 20%. However, as the repayment period is only six months, it is actually 40% per annum! This rate is 11 times higher compared with the average fixed deposit rate of 3.5% per annum in the market.

These loans are offered mostly by unlicensed moneylenders, otherwise commonly known as “loan sharks”. According to a news article published in The Star recently, the interest they charged are mostly counted based on monthly or even daily rest basis.

It is learnt from the article that people usually borrow between RM1,000 and RM10,000 at an interest rate of 0.5% to 1% per day. This works up to about 15% to 30% monthly. When the loan is defaulted, another 5% is added as a late repayment penalty.

It therefore becomes evident that the borrowers of such loans face immense problem repaying their loans. They will generally end up borrowing from other moneylender to cover their existing loan which will lead them to more debts. Imagine the emotional stress from harassment when they are unable to serve the interest.

Sadly, this loan with its easy application process and low requirement attracts people who are financially desperate, regardless of professional or income group.

Bank Negara has announced that Malaysia’s household debt-to-gross domestic product (GDP) ratio has increased from 86.8% to 89.1% as of 2015. We have one of the highest household debts in the region without including the unregulated loans from these “moneylenders”. I wonder how this “shadow banking” or “off balance sheet transaction” impact our people and economy.

To protect the rakyat, the government should look at strengthening the enforcement of eliminating illegal money lending.

As the saying goes “where there is demand, there is supply”. Hence the key is to first understand why people resort to borrowing from these “moneylenders”. It is important to strengthen financial education and awareness of public through various channels.

People, especially children, should be taught to borrow for the right things from young, and understand the difference between good debt and bad debt. More importantly, people should learn to ask themselves if there is a real need to borrow. Borrowing money to buy assets that depreciate over a short period of time, such as cars and luxury items is deemed as “bad debt”. This is in stark contrast to “good debt”, such as buying a home or asset that has the possibility of appreciating in the long term, and at the same time, paying a much lower interest rate compared with bad debts.

For people with a genuine need for financing, there are many other options such as borrowing from the banks and legal money lenders, or even to the explore “fintech”, a financial technology which offers more efficient and cheaper financial services through the use of technology. Again, it is important to ensure these channels are legal and well regulated.

Borrowing from unregulated moneylenders is like jumping from the frying pan into the fire. It is important to have wise financial planning in the first place and always seek advice before doing anything financially. One may get advice from government agencies, such as Agensi Kaunseling dan Pengurusan Kredit, when faced with financial challenges.


By Datuk Alan Tong, who has over 50 years of experience in property development. He was the World President of FIABCI International for 2005/2006 and awarded the Property Man of the Year 2010 at FIABCI Malaysia Property Award. He is also the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com.


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Beware of meddling via soft power !

Joining the club - Illustration: Shen Lan/GT

MEDDLING by foreign powers is an established phenomenon for as long as one can remember. They are not limited only to the Muslim countries and communities. For example, last year at the Seventh Summit of the Americas in Panama City, President Barack Obama indirectly admitted this when he publicly stated that the days of US interference in the affairs of Latin America were coming to an end. Reportedly, he said, "the days in which our agenda in this hemisphere presumed that the United States could meddle with impunity, those days are past". Some traced this to as far back as the conquest of the Americas by the Europeans in the fifteenth and sixteenth centuries especially after its so-called "discovery" by Columbus. Perhaps, the major difference is that there are many more Latin American leaders and populace who are more "resolute" than their Muslim counterparts in resisting any attempt to meddle.

More generally "colonialism" is one form of meddling that many parts of the world have experienced, and are still suffering from it. Malaysia is no exception, no denying that there are some benefits to be learnt from the process. But where it hits the "mind" is where it is more toxic to the extent that it can debilitate. Even long after achieving independence the "colonised" mindsets are still clearly felt whether at the level of the leadership or the population at large. The post-Merdeka generations are more vulnerable when they are shut out from the larger discourse affecting the future of the nation, ironically due to yet another form of "meddling" that left them disenfranchised. In the days of social media, the impact of this can be phenomenal, what with other contending parties that are more than eager to attract their attention, as we have seen recently.

Social media is an excellent platform for yet another form of meddling – soft power. Coined a few years ago, soft power describes "the ability to attract and co-opt using persuasion (mind-twisting) rather than by coercion, notably by bullying and arm-twisting (hard power). To the disenfranchised, soft power is said to be very appealing especially when "credibility is the scarcest resource", as explained by Joseph Nye, who introduces the concept. In fact more recently, the term has expanded to include "changing and influencing social and public opinion through relatively less transparent channels and lobbying through powerful political and non-political organisations."

Of the six factors that are often associated with enhancing soft power, education and culture seem to be pivotal. In other words, meddling can be carried out discreetly using these two dimensions. Indeed, Nye did suggest how higher education leaders might enhance American soft power by increasing international student and cultural exchange programmes. Viewed this way, soft power is a very subtle extension of the colonial process without even realising it. A case in point is when in 2007 the Rand Corporation in the US developed a "road map" for the construction of moderate Muslim networks and institutions "that the US government and its allies need, but thus far have failed, to develop clear criteria for partnerships with authentic moderates". It therefore proposes "the building of moderate Muslim networks an explicit goal of US government programmes".

More explicitly, it listed who the "moderates" are to be targeted according to priority, namely: liberal and secular Muslim academics and intellectuals, young moderate religious scholars, community activists, women's groups engaged in gender equality campaigns, and finally moderate journalists and writers. It argued that "the US should ensure visibility and platforms for these individuals." For example, to ensure that individuals from these groups are "included in congressional visits, making them better known to policymakers and helping to maintain US support and resources for the public diplomacy effort." If these sound like "meddling", it is because it is one – effectively disguised as "soft power". It is without doubt, yet another attempt among many to continuously interfere and manipulate the situation from the perspective of the authors and the sponsoring institution. Despite this it is very sad if Muslims are oblivious to the sleight of hand, and succumb to the form of endless meddling. Only to realise that it causes more confusion and divisiveness among the community.

In the days ahead before Aug 31, it is incumbent upon us to deeply ponder what Merdeka means beyond the routine parade and march-past, flag-raising ceremony and singing the national anthem.

By Dzulkifli Abdul Razak, theSundaily

With some four decades of experience in education, the writer believes that "another world is possible". Comments: letters@thesundaily.com


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THAAD will not protect ROK but cripples UN unity on NK nukes; Sino-US ties should surmount saber-rattling

Pawn of the USA

Public opinion in the Republic of Korea is divided over whether the deployment of the United States' Terminal High-Altitude Area Defense anti-missile system is in the national interest.

Many of those in their 20s, 30s or 40s disagree with the decision. And anti-THAAD lawmakers have demanded an open debate in the National Assembly to discuss whether the THAAD is really in the ROK's interests militarily, diplomatically and economically.

THAAD is incapable of defending against the potential missile threat from the Democratic People's Republic of Korea, as the DPRK's missiles travel at a lower altitude than those THAAD is designed to intercept. Even if that was not the case, one THAAD battery would not be able to provide protection against all the DPRK missiles. The capital Seoul and its adjacent metropolitan area, the country's most populous regions, are even outside the protection range of THAAD.

However, the system's X-band radar has a range of at least 2,000 km, which is the real reason the United States wants it deployed in the ROK as it will be able to snoop deep into Chinese and Russian territories.

Seoul claims that it will adopt the radar with a detectable range of 600-800 km, but the mode change can be made at any time in accordance with the needs of the US military that will operate the THAAD battery in the ROK.

If THAAD is deployed, it will sour the ROK's relations with China and Russia, trigger an arms race and damage trade. It will make it difficult for the country to seek cooperation from China and Russia in denuclearizing the peninsula.

Seoul should heed the voices saying the only way to denuclearize the peninsula is through peace talks and changing the armistice treaty after the 1950-53 Korean War into a peace treaty. - China Daily

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THAAD cripples UN unity on NK nukes

The UN Security Council failed to agree on a US-drafted statement that condemns North Korea's latest ballistic missile launch on Tuesday, because China demanded the statement oppose any provocative moves that take advantage of North Korea's nuclear threat and missile project to enable a deployment of anti-missile systems in Northeast Asia.

China's proposition is aimed at the Terminal High Altitude Area Defense (THAAD) missile system that will be stationed by the US in South Korea. Since the US and South Korea announced the plan, the UN Security Council has failed twice to reach agreement over North Korean missile launches because of the major split between China and the US.

The planned deployment is adding a new challenge to the vulnerable geopolitical landscape of Northeast Asia. The international collaboration against North Korea's nuclear project has been crippled. A degenerative aura of the Cold War is emanating from the US-Japan-South Korea alliance.

China does not have a motive to encourage North Korea to develop nuclear weapons or ballistic missiles, because at the cost of its ties with the North, it has been a backer of the UN Security Council's sanctions against it. However, the US and South Korea went too far and made use of North Korea's nuclear threat to deploy THAAD, which will cause great harm to China's national security. Given China's cooperation in sanctioning North Korea, it is nothing but a stab in the back.

North Korea's nuclear ambition was primarily triggered by long-standing military pressures imposed by South Korea and the US. The escalating pressures have met bolder nuclear projects. China being a well-intentioned and responsible mediator has been paid back by a threatening advanced military system.

The US and South Korea are strongly convinced that they are absolutely right in this case, and any disagreement is totally wrong. The narrow-mindedness renders all proposals fruitless and futile.

The Korean Peninsula is intertwined with too many complications and concerns. The deployment of THAAD is a selfish and reckless move that will break the fragile balance with terrible outcomes: There will be a huge setback in the Sino-South Korean relationship; the susceptible Sino-US collaboration over Northeast Asia will collapse - all will result in a reconfiguration of each stakeholder's policy on the region.

Although unwilling to go to war, all players in the big game should reflect on their policies as growing tensions have turned them more defensive rather than open.

The major-power rivalry between China and the US is behind many disputes in East Asia. Beijing and Washington seem to have a tacit understanding that their rivalry won't explode into a physical conflict. However, some countries cannot look at the big picture, and are eager to pick sides, but they will only find that they are cannon fodder.

China and the US are exchanging blows over THAAD, but they won't get into a real fight. However, if South Korea leaps headlong into this round of games and becomes a US agent, it will put itself in the middle of a new crisis.

South Korea is a confused player in the big game. It might eventually find out that THAAD will not bring about what it really expects.- Global Times

Sino-US ties should surmount saber-rattling

US naval ship visits Qingdao after disputed South China Sea ruling


https://youtu.be/wkOwZwuDOyg

US naval ship visits Qingdao after disputed South China Sea ruling

A US Navy guided missile destroyer has arrived in the northern Chinese port of Qingdao. This is in the first visit by an American warship to China, after China refused to accept an arbitration ruling on the South China Sea dispute.US Navy guided missile destroyer the USS Benfold arrived in the northern Chinese port of Qingdao on Monday, marking the first visit by a US military ship to China since the South China Sea arbitration. This visit is believed to be a signal and an opportunity for both countries to ease tensions between them.

Before the arbitration award was announced, Washington deployed two aircraft carriers in and around the South China Sea, an obvious move to flex their muscles, pile pressure on China and encourage its allies. China responded in kind with a large military drill in the region and a routine combat patrol. Both countries have engaged with each other in a fierce tug of war.

This is not the whole picture of Sino-US relations, not even their military relationship. Not long ago, the US kept its invitation for China to participate in its Rim of the Pacific military exercise, which is mainly attended by its allies.

The Chinese shouldn't always push the USS Larson's provocations in the South China Sea into the limelight, nor can they easily turn over a new leaf with the US as the USS Benfold came in peace. We shouldn't be tricked by a single gesture from Washington. Both China and the US must admit that the undefined Sino-US ties will continue being shaped in the future.

China and the US are exercising more precautions against each other, and they should get used to the new developments, such as a limited arms race, and not having to take the other's defensive actions as unacceptable.

Throughout the history of human civilization, China and the US have engaged in the most peaceful rivalry between an emerging power and an established power. The Chinese should know as a dominant powerhouse, the US is relatively rational, and has not opted for harsh gambits. Washington also admits that China is a rational and careful emerging power, and pays enough respect to US national interests.

However, both China and the US still feel their own national security is being challenged by each other. Frankly speaking, China feels more insecure than the US. The US doesn't have to overreact as for a long time to come, China won't be powerful enough to launch a showdown against the US.

China should speed up its military modernization and narrow the gap with the US in military strength. The priority should be an increase in strategic military deterrence. The US shouldn't see this as a hostile move. It must know that it cannot sustain an overwhelming military advantage over other countries forever. A strategic balance is essential to world peace in the nuclear age.

China has no plan to dominate Asia with its military prowess. What is happening in the East and South China Seas are simply territorial disputes, not a prelude for China to overturn the current world order.

China and the US should nurture a strong awareness of risk control and strategic trust to ensure the incessant frictions won't become a real conflict.

Saber-rattling remarks do not mean both sides are ready for a war. Both sides must strive to avoid a military showdown. Whether they like it or not, they should respect the other's core national interests. - Global Times

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