Malaysian Civil Servants and loans
A startling report published by Malaysia's state media company and widely disseminated raises questions over the granting of loans and the checks made on borrowers. It also raises the question of what problems might follow.
Malaysia is a federation of states but there are three districts that are "Federal Territories" and subject to direct, if delegated, control from central government. One is the capital city Kuala Lumpur (although that term is now open to debate as the administrative capital and most organs of government have moved to a purpose built town called Purtajaya).
Management of the city is delegated to the much derided DBKL (Kuala Lumpur City Hall). And the criticisms are, often, very well founded. Corruption has long been a problem from top to bottom and the city raises huge sums in property taxes but the roads and pavements are maintained very poorly. While in the tourist parts of the city, overhead walkways have been constructed, only a few metres away, there is extensive dilapidation. Moreover, the city spends significant sums on converting road names from English or Chinese to Malay and in making zoning orders based, it is often alleged, on a plan to replace Chinese traders with Malay traders. Protection rackets for car parking are rife, run mainly by Indian organised crime gangs, who are on visibly good terms with DBKL's traffic wardens who, residents say, accept payment from the gangs to allow them to offer "jockey" services and park cars illegally. There have been many complaints about the difficulties restaurant and bar owners face obtaining permits unless bribes are paid.
This all makes some kind of sense now. Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor is reported, in official media, as saying that more than 1,200 DBKL employees have taken on so much debt that, in some cases, they have only MYR50 per month (about GBP10) to pay their living expenses.
Tengku Adnan said some of them have been caught cheating and falsifying their salary slips in order to qualify for higher loans.
"We also propose that DBKL help them by settling the debts first and later make periodic deductions from the staffs’ salary.
"However, this has not been finalised, as we are still looking into the mechanism," he said
That, on the face of it, seems like a reasonable solution but it cannot work unless their sources of credit are removed. Those that have already demonstrated a willingness to commit fraud cannot be trusted not to do it again.
But there is another dimension: how many of those people were taking into account money obtained by bribes when borrowing? Clearly, unless they were in some way challenged, they would know that their cash-flow position was untenable, therefore it is logical to assume that they have other cash resources.
Any investigation must also look at the overall expenditure of the households and to ascertain whether there are funds from other sources that should be identified and, if that reveals other offences, to act accordingly, with prosecutions and, where there are convictions or admissions, dismissal.
For financial institutions, the patterns of payment will demonstrate where loans may go bad. Levels of credit card debt in Malaysia have caused concern for some time, with restrictions being introduced in a series of measures designed to constrict borrowing whilst not creating hardship.
The civil servants are paid well, compared to the private sector. The problem is not, directly, related to salary, but rather to spending. Education is needed and it might be time for banks to begin to run adult financial literacy classes.