Sunday, February 28, 2010

Money Sense .....

Open up the back pages of the local newspapers, we can see almost daily rows and rows of bankruptcy orders. Credit card debts, loan defaults, failed business are some of the reasons. Over the last year or so, more and more details surfaced about how many people in this blessed country of ours are deeply in debt. Just look at the long list applying and receiving the wang zakat. Any rumours of “gifts” and any sniff of “easy money”, we can see thousands congregating. We hear a number of people declaring themselves poor (‘fakir’ and ‘miskin’) to get their hands on the wang zakat. Gone are the days where people were eager to show off their pay to gain more loans. Now people are more eager to show off their debt (‘hutangs’) Based on these alone, debt is a very serious issue. Up there with other social and economic issues. Debt can lead to other social ills and crimes.

The authorities, I am sure, realised this. From the curb on personal loans, new regulations on credit cards and also the introduction of the Supplemental Contributory Pension (SCP), the authorities are trying to address the debt and personal finance issues. But what else can be done?

There is only so much the authorities can do. As in many things, financial discipline involves personal will and personal control. How best can we do this? Obviously education and awareness plays a big role, if not the biggest. But, are we taught about this in our schools? Not during my school days. I believed it’s the same for many others. Lack of personal finance education can lead to costly mistakes. A good example is buying a car. I believe to many people owning a good car is a symbol of status and among the most important things in live. It’s the same with me. Imagine my shock when reading the book “Rich Dad Poor Dad” by Robert Kiyosaki. According to him, which I believed is true, a car is a LIABILITY not an asset. Come to think of it, it should have been commonsense. Apart from a few vintage cars, all cars depreciate in value as soon as you get it out of the showroom.

So, education is very important. Hopefully the Education authorities can look into this and do something similar to what they did for “Corruption” issues. Give our kids, our young, a head start in personal financial management.

How about us who missed the boat? What can be done to help us? Our neighbours, Malaysia, had setup ‘Agensi Kaunseling dan Pengurusan Kredit’ (AKPK) or ‘Credit Counselling and Credit Management Agency’. Its mission is to promote financial wellness among Malaysians by empowering them to be financially savvy through comprehensive consumer educational programmes and providing professional credit counselling and debt management programmes to enable them to regain control of their finances. AKPK is a wholly owned subsidiary of Bank Negara Malaysia, set up to provide financial counselling and debt management to individuals as well as financial education to help individuals take control of their financial situation and gain peace of mind that comes from the wise use of credit. All their services are provided “FOC” (Free of Charge). You can read more about AKPK and learn some tips and even download their Money Sense / Celik Wang e-book here.

May be setting up a similar agency here will help not only in debt management but more importantly increase ‘financial literacy’ and hopefully shorter list of wang zakat applicants.

Tuesday, February 23, 2010

My Country Brunei Darussalam....

Today, 23rd February 2010, we as a nation celebrate our beloved the land of unexpected treasures country, Negara Brunei Darussalam national day. "Negaraku Brunei Darussalam" a simple theme yet with deep meanings. What does it mean to us? I am sure each individual will interpret it in their own way. To me it simply says, proudly, Brunei Darussalam is my country. It brings strong sense of belonging, sense of ownership. Owning and belonging will make us, most people, to feel attachment and love. This leads to actions of care and not wanting to lose the one we love. Automatically we will be acting responsibly. Responsibilities we will be willingly doing. All will be natural to us. Respecting the authority, the religion, the laws, the culture are among the things that will come natural to us. In true spirit of our national day, not just today, but every day, let’s remind ourselves proudly "Negaraku Brunei Darussalam". MY COUNTRY BRUNEI DARUSSALAM.

Recalling back over 26 years ago, the evening of 31 Dec 1983. Rain could not stop thousands thronging Masjid Omar Ali Saiffudien for the hajat prayers ushering Brunei Darussalam gaining full independence. Sitting outside, not managing to get space inside, a lot of us were wet under the drizzle. None of us care. We just had to be there.

As the hours pass, events moved on to the adjacent Taman. Used to be the old Padang Besar, the centre of Bandar Seri Begawan, centre of everyday lives for so long. It was fitting the proclamation of independence was held there. As the clock struck 12 midnight, His Majesty made the proclamation. Some in the crowd shed tears and shouted "merdeka". The late Paduka Seri Begawan Sultan led the shout of "Allahuakbar", the crowd roared. Standing at the centre of the Taman was surreal even for a teenager. I was a teenager then. In my shirt and jeans. Looking back, I should have been in my best baju melayu for the historic day. Baju melayu or not, the moment His Majesty proclaimed our full independence and the shouts of "Allahuakbar" will forever etched strongly in my mind, my memory. A moment we will never experience again...

Part of being responsible to our country is being responsible in the use of our scarce resources especially water and energy. On average, we use 450 litres of water every day. One of the highest in the world. That’s equivalent to 300 big bottles of bottled water. Around $240 worth of bottled water yet we are paying only 5 cents for it. Almost ten times cheaper than the production cost. Recently, the Energy Authorities declared “Brunei's roughly 400,000 inhabitants consume electricity similar to that of a country with a population of one million”. Both shocking figures. Let’s do something about it. Start saving. Save water, save electricity. And save money too. At least the extra money we save from our utility bills can help us pay off our credit card debt.

Friday, February 19, 2010


Late last year the Ministry of Finance introduced regulations on credit card. In short, (quoting a notice from a bank), “to qualify for a credit card, you will have to be at least 21 years old, have a minimum gross salary of B$500 per month with your salary credited into your account with the bank issuing the credit card or maintaining a deposit amount equivalent to your card limit.”

How about the credit limit? Below B$1000 will only get one month gross salary. Two months for gross salary between $1000 and $9,999. Anybody with gross salary above $10,000 can get anything the bank wish to give. Lucky them. Or shall we say unlucky them?

How about the minimum payment? This will interest a lot of people. Currently some banks charge as low as 2.5% of outstanding balance. But from January to March, it will be 5%. After that, it will be 8%. For a lot of people this means the minimum payments they have to make to the bank will be at least three times what they are paying before. More money to service their debt, less money for other things. There goes the luxuries.

What will happen to cardholders who do not qualify with the new criteria? By June 2010, they will have their cards withdrawn or invalidated. The outstanding balance will have to be settled over a period up to 36 months. What will be the interest rate charge? If based on existing credit card rate, people will end up paying a whopping 24% interest annually. Makan darah some people will shout. Hopefully the interest rate will not be that exorbitant. Afterall, the cardholders are no longer getting the full services of a credit card. Just servicing what the owe the banks. Hopefully the banks will not take advantage of the people who will no longer be their loyal customers after three years.

As in many things, everything has its pros and cons. So do these new regulations. Some says in short term, at least for the next three years, some will suffer. But after 2013, people will have less debt. What is a short term suffering compare to long term prosperity? Some says there will be increase of people declaring themselves fakir and miskin which will allow them access to “al-gharimin credit”. Some even says this regulation is only favouring the rich, the well paid people. Giving them more opportunities to credit and access to the luxuries of life while the not so well off can only watch in the sideline, gigit jari. Some says this will make people treasure the luxuries and pleasures of life, not easy to get hence we will appreciate them more. Right now, swipe your card, you can get 42” plasma TV, the latest smartphones, self lighting always visible watches and many more. Worry about paying for them later. In the future, we will have to work hard for it. The argument goes on and on.

How about the economy? Will it be affected? Not knowing any data, and not bothering to look up, lets deduce what is the worth of the credit card industry here. Assuming population of Brunei is 400,000. With 50% above 21 years of age and average minimum income of B$1,000. Assuming everyone, which is not impossible, every single one, has one credit card each with B$1,000 limit. That will be B$200 million worth of credit monthly. B$2.4 billions worth of business annually. What is B$2.4 billions? That’s about half of the Government’s annual expenditure, more than double the total investment in Brunei in 2005. Can the economy cope with loss of B$2.4 billion worth of credit from the consumers?

This whole thing reminded me of the curb on personal loans. Based on that experience, is anybody willing to bet against the bank industry coming up with ways around this or finding creative, alternative ways to give us, the consumers, credit? Debts will live on I suppose.....