Tuesday, November 25, 2008

Who Is In Charge of Licensed Money Lenders?

Malaysia is flooded with many "licensed" money lenders who we read about often in the newspapers. They are often viewed as licensed "ah longs" who have legal basis to lend money but uses not necessary so legal means to recover debts.

Here's a little trivia for you. Which Ministry is in-charge of these "licensed money lenders"? Well, if you are "new" to Malaysian politics, it's not the Ministry of Finance, where it logically should be. After all, logic is not what is the strength of our Government's administration (e.g., 13 agencies under different ministries takes care of public transportation).

What is possibly most surprising when I discovered this fact about 2 years ago is that money lenders are actually licensed by Ministry of Housing and Local Government. Yes, you heard (read) me right. How on earth is money lending activities related to this Ministry, you are likely to ask. Well, to understand the above, you'll probably need to understand the background to the Barisan Nasional administration, that is the Housing & Local Government ministry has always been the domain of component party, Malaysia Chinese Association (MCA). So you can further infer the connection between the political party and the business the Ministry is tasked to "regulate".

Well, out of curiosity of what the official answer from the Ministry is going to be, I asked the Prime Minister the following question:
...[apakah] sebab kuasa perlesenan syarikat pinjaman wang berada dalam Kementerian Perumahan dan Kerajaan tempatan dan bukannya satu fungsi Kementerian Kewangan yang lebih berpengaruh dan berkepakaran dalam bidang kewangan.
The reply from the Prime Minister's office is as follows:
Untuk makluman Ahli Yang Berhormat, perniagaan pinjaman wang dan pajak gadai merupakan peninggalan (atau legasi) dari sistem pentadbiran terdahulu.

Peniagaan ini tidak diletakkan di bawah kawal selia Kementerian Kewangan ataupun Bank Negara Malaysia (BNM) kerana syarikat-syarikat yang menjalankan perniagaan tersebut tidak dibenarkan mengambil deposit dari para pelanggan. Untuk menjalankan perniagaan, syarikat-syarikat yang dilesenkan perlu mempunyai modal sendiri yang mencukupi untuk memberikan pinjaman. Oleh yang demikian, syarikat-syarikat yang menjalankan perniagaan pinjaman wang dan pajak gadai tidak terdedah kepada ancaman kewangan yang boleh menyebabkan "economic risk" (dengan izin) atau ketidakstabilan kewangan, seperti yang terdapat pada bank-bank dan institusi kewangan komersil.

Sekiranya terdapat cadang untuk memindahkan kuasa kawal selia syarikat-syarikat yang menjalankan perniagaan pinjaman wang dan pajak gadai ke Kementerian Kewangan, satu kajian yang menyeluruh perlu dilaksanakan oleh Kerajaan sebelum sebarang keputusan diambil. Ini adalah kerana satu persetujuan perlu dicapai oleh pihak kementerian dan syarikat-syarikat tersubut mengenai tatacara pengurusan risiko kredit (credit risk manangement practice) yang dipraktikkan.
Make what you will with the reply above. I found the argument that a money lenders' license is unconnected with the country's credit system just plain ignorant or even ludicrous , or even the fact that these licensees need to agree before a change in ministerial responsibilities is effected.
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