It appears that Prime Minister Najib Abdul Razak has finally woken up to some of the economic ills facing the man on the street by announcing significant changes in bankruptcy laws. But it maybe too little too late. An entire generation may actually have lost out due again to the Barisan Nasional not having their eyes and ears on the ground.
1997 appears to have been yet another watershed year where Malaysia’s cyclical economic downturn affected its economy adversely. That year then-prime minister Dr Mahathir Mohamad placed the blame exclusively on currency speculators.
He left the country’s economy completely exposed to serious financial difficulties by embarking on poor economic and development schemes resulting in almost half its banks closing.
Together with their closing, the country’s economy slid with a significant number of businesses shutting down. Yet again, despite the reservations of the then finance minister Daim Zainuddin, tax payer’s monies were utilised to bail out banks.
And despite utilising tax payer’s monies, banks were given vesting orders unauthorised by Parliament, where banks that went bust were allowed to reclaim lendings from whatever businesses that were still tottering to survive.
The mantra, that if you are dead in business, you are exactly that and had no further claims did not apply to our local banks because the Malaysian government have never viewed them as businesses in the first place. They always survived even if it meant bankrupting half the nations’ industries.
The culture of protecting the banks is so perverse that even judges in Malaysian courts are allegedly directed to ensure banks always win their cases even though they maybe grossly at fault and be the main culprit for a financial crisis as demonstrated in the poor management decisions and fraudulent practices that brought down the Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae) and investment advisor Bernard Madoff who started the financial disaster of 2008 bringing both the United States and the world at large to the brink of an economic catastrophe.
But unlike the US where the Feds make certain banks pay for their indiscretions, Malaysian banks walk, and in fact get to grow bigger to bully both the customer and the government.
The BN failed to understand fundamental economics of the 21st century where a sneeze at Wall Street or Fleet Street or gross mismanagement in Greece, Ireland, Spain, Portugal will and can affect a man working his heart out trying to make ends meet in Pasir Gudang.
Or, as in 1997, that same man in Pasir Gudang can loose his job due to the poor economic policies of his own prime minister and end up being unable to pay for his home or car.
Bankruptcy is no more about that neighbour that who borrowed big time an decided not to pay up. BN was and still is fixated with enriching cronies and did not fathom the serious economic and social devastation inflicted on almost 20 percent of the country’s workforce.
With the coming US$16 trillion economic calamity building up in the US, entire savings can be wiped leaving a person here in Malaysia bankrupt through no fault of his.
The late 1990s was also the age of the have and have nots. Anwar Ibrahim, then deputy prime minister was terminated abruptly due to differences in opinions how to resolve the financial crisis and amidst cries of reformasi stemming from his brutal beating by police officers, Malaysia’s political awakening had started.
This was also the year Mahathir’s finance advisers, Ali Abul Hassan and the discredited Nor Mohamed Yaacob, involved in Malaysia’s worst forex losses, allowed the establishment of credit rating agencies like Central Credit Reference Information System (CCRIS) and Credit Tip Off Services (Ctos).
Age of blacklisting
The age of blacklisting, never before applied in Malaysian history, was established in an age where there was and still is no one to monitor online blacklisting of consumer’s personal information. The age where a human being became a digit in a system unknown to him had begun.
The Insolvency Department purportedly clocks an average of 50 bankruptcies per day although some claim there maybe much more judging from the growing morning surges at the bankruptcy counters at our courts throughout the country.
This is obvious when lawyers hired on a flat rate commission by bankers go after Malaysians unable to meet their car installments, housing installments and business repayments on time.
Making a person bankrupt in Malaysia is such a cinch. To inflict economic death on an individual, creditors need not serve bankruptcy papers to these individuals personally but embark on substitute service in the cheapest newspapers and our courts actually buy this.
Bankruptcy is a quasi criminal act and our judges dish out convictions without the presence of the convict. Malaysia must be the only country in the world that executes judgments of this nature.
No one seems to know the actual number of bankrupts although the Insolvency Department has placed the number at about half million with 30 percent being Malays, 30 percent Chinese and remainder others.
Some sources indicate that there are actually more than 1.7 million bankrupts in Malaysia with more than 90,000 being civil servants just because they failed to pay their car loans or being a guarantor to one.
Apart from bankrupts, over and above that, anyone slipping up on their loan repayments even though payment has been late for a few days are blacklisted. This blacklisting list has now become so contentious that civil liberties of the average Malaysian citizen are seriously affected.
You can be blacklisted by Maxis for not paying your bills on time - by TM, by P1Max, by an unsecured creditor, by any bank, by National Higher Education Loan Corporation (PTPTN), by the police for a traffic offence, by Road Transport Department (RTD), in fact by anyone who can gain access to your personal information.
No one seems to know the ratio between blacklisted citizens to that of a bankrupt. If the estimate of 500,000 bankrupts is taken with an average of one bankrupt to five blacklists, this may work out to be three million bankrupts and blacklisted citizens if not more.
The consequences of bankrupts are ominous. They loose all their property. Their bank accounts are frozen, and if they are Muslims or Malays, they will have their Tabung Haji and Amanah Saham Bumiputra accounts sealed.
They will be prevented from leaving the country; meaning if you are working out in the Middle East or in Singapore you may now risk losing your job. They always say that the Insolvency Department will take care of you.
The reverse is probably more accurate. Insolvency officers not only don’t have the time of day for you as one officer has to apparently monitor more then 5,000 bankrupts, but worse still they are poorly-trained and have no clue if a bankrupt has been mistakenly declared bankrupt with the wrong person being declared bankrupt.
Bankruptcy officers don’t take the trouble to go to court and investigate properly if the terms adjudicating orders and receiving orders have been properly complied with. To make matters worse, judges are poorly versed in bankruptcy laws.
Public now on the receiving end
The general public is now on the receiving end. On one end it is perceived that banks who are in fact businesses are unfairly supported by the government at the expense of the rakyat having to suffer at their indiscriminate handling of this entire issue.
The days of feudal bondage have finally been replaced by economic bondage. Despite repeated calls to the government and Law Ministry to quickly reform bankruptcy laws in this country, these calls have fallen on deaf years.
Apart from ordinary folk who have to suffer the humiliation of bankruptcy, genuine businessman and entrepreneurs have been stopped in their tracks by these laws, thereby effectively halting the country’s economic progress. Entrepreneurs who have gone down are the best people to restart and develop a business due to their experience and not a fresh graduate with no field experience.
But the worse thing of being blacklisted or bankrupt is, aggrieved parties don’t talk about it in public. They keep the lid to themselves. But soon they maybe able to make their displeasure known. And that displeasure could be at the ballot box.
This government which has repeatedly bailed out banks, gave them vesting orders therefore surreptitiously and giving them the leeway to keep collecting monies through merged banks, third party debt collectors, some based in countries as remote as South Africa and even New York, is nothing more than circumventing the law to indulge in money laundering.
You just don’t sell a loan to a third party without the consent of the borrower. The message is clear. This three million or more affected borrowers or businesses will vote, and when they do, it will not be for the Barisan Nasional.