ORANG MELAYU MESTI BACA - Ah Long Lagi Tahu Menguasai Ekonomi : Pak Menteri Tak Faham Apa Pun, Bank Negara, Penasihat Ekonomi Tak Kisah, Ekonomi Negara Hampiri Maut

 I am writing this about the economy,  after a long discussion with a friend of mine who has a PhD and is savvy on the same wavelength.

First of all no one (Ministers, Civil Service, Advisers etc) seems to know what is happening on the ground and how to go about helping the economic situation. 

The Minister is thinking about opening up pasar malams and allowing religious places to function normally. But no news about allowing businesses to function back to normal. Or how to help businesses quickly. 

The open air bazars and places of worship have been proven to be spreaders, even super spreaders. The places of worship contribute little to economic growth, wealth creation  or job creation - which is what our country needs now. We need the businesses to be allowed to function asap. Over 290,000 bumiputera graduates remain unemployed. The total unemployment / underemplyment level in the country is into millions already. 

This post is actually about the Ah Longs. Why they are here, where they are going and why the government does not know how to deal with the situation.

First some Ah Long news. 

Ah Long news No. 1 - The Indian Muslim Mamak Restaurants Are In Trouble

  

• increasingly large number of Muslim restaurants turn to illegal Ah Longs 
• Ah Longs charge very high interest but what can we do?
• Muslim Restaurant Association, 4,500 members, 12,000 restaurants 
• From 7 branches, cut to 5, from 5 cut to 3
• they need Ah Longs
• they borrow RM100,000 - RM200,000 from Ah Longs
• to help over short term of few months
• retailers also turned to illegal Ah Longs  
• retailers face closure because of cash crunch
• in today’s Covid-19 cash is king
• asking govt to give soft loans with low interest
• not asking a lot. Just RM100,000 to RM200,000
• not banks because they will want to see past year’s profits
• banks “do not want to take the risk” with restaurant owners or retailers 
• retailers, unable to get financing from banks, turning to Ah Longs 

These are the mamak restaurants. Not gamblers who lost money at Genting Highlands. Indian Muslim mamak restaurants are desperate to borrow RM100,000 - RM200,000 from the Ah Longs. 

There are 12,000 mamak restaurants that belong to this Muslim Restaurant Association alone. There are more who do not belong to the association. If each one of them borrows RM100,000  from the Ah Longs, that adds up to RM100,000 x 12,000 = RM 1.2 BILLION !! That is a lot of money.

Believe me folks the Ah Long industry is much bigger than RM1.2 Billion. The government is really losing so much tax revenue to the illegal Ah Longs. 

Why do the Indian Muslim restaurants go to the Ah Longs ? They say it is because : 

• not banks because they will want to see past year’s profits
• banks “do not want to take the risk” with restaurant owners or retailers 
• retailers, unable to get financing from banks, turning to Ah Longs 

Ok tuan-tuan please dengar baik-baik. Kedai mamak is a very important sector of the Malaysian economy.  Saya yakin bilangan kedai mamak (restoran) mungkin hampiri 20,000 kedai dalam negara kita. Sebab di Sandakan dan Tawau pun ada kedai mamak. 

First of all, kedai mamak sudah menjadi sebahagian daripada 'food security' negara kita. Setiap pagi beratus ribu orang singgah di kedai mamak untuk makan roti canai dan teh tarik atau makan nasi lemak dan minum teh dsbnya. RM3.00 sudah cukup untuk makan di kedai mamak. They are cheap, cleaner than most, efficient, always at the corner and always open. 

Tetapi dari segi perjalanan ekonomi harian negara kedai mamak mainkan peranan yang sangat besar  dalam multiplier effect dan velocity of money.

On average, setiap kedai mamak boleh buat sales RM3,000 sehari. RM1 ribu waktu breakfast, RM1,500 waktu lunch time and maybe RM1,000 waktu petang dan malam. Say sales of about RM100,000 per month and RM1.2 million a year.  Some kedai mamak can do RM15,000 sales a day or more. 

So katakanlah 15,000 kedai mamak x RM1.2 million sales a year = RM1.8 BILLION sales a year !! That is a lot of business.

But what is more important is that the kedai mamak business is extremely 'transaction intensive'. Multiplier effect depa sangat tinggi.

Setiap hari the kedai mamak must buy chicken, vegetables, meat, eggs, rice, flour, sugar, condensed milk (for teh tarik), canned drinks, tea powder, coffee powder, Nescafe, Milo, tissue paper, etc.  Everyday - without fail. Everyday there are lorry and van deliveries by suppliers to the kedai mamak.  AND THE WHOLE THING IS LARGELY A CASH BUSINESS. 

So even the average kedai mamak's RM3,000 sales per day is achieved by selling one roti canai and one teh tarik at a time. The multiplier effect and the transactions involved are many in order for the kedai mamak to sell one roti canai and one teh tarik. 

For example the kedai mamak are borrowing about RM100,000 from the Ah Longs. If their annual sales are around RM1.2 million (based on RM3,000 sales per day) it means that RM100,000 has been "turned over" 12 times.  The RM100,000 "modal pusingan" helps to generate RM1.2 million in annual sales. 

So every Ringgit of cash the kedai mamak spends goes around 12 times a year.  This is also called the velocity of money - the speed at which cash money goes around in an economy.

If you are a Dato Orang Kaya and you sapu some government contract and you made RM1.2 million that is most likely a one time transaction only.  You can make RM1.2 Million from just one transaction. That RM1.2 million has a velocity of maybe just 1.  And only one person becomes kaya. 

But on the other hand the kedai mamak fellow who can generate annual RM1.2 million sales from that RM100,000 borrowed from the Ah Long has a 'relative velocity of money that is TWELVE TIMES more.

Twelve times more transactions to beli ayam, beli sayur, beli Milo, beli Nescafe, twelve times more lorry deliveries to his restaurant etc.   Just one kedai mamak generates so much buying and selling activity in the local economy in his area. Lagi ramai orang jadi kaya.   

But borrowing from the Ah Long will eventually kill the kedai mamak. As the news says some have reduced from seven outlets to five, from five outlets they have reduced to two etc.

If the government can extend short term loans (1 to 3 years) of RM100,000 to RM200,000 to the kedai mamaks at low interest rates not only will it help the kedai mamaks but it will really boost the economic turnover in the country. Lagi ramai orang dapat hidup.  Sekarang ini Ah Long hidup, tetapi ekonomi mati.

Ah Long story No. 2

Here is another Ah Long Story. This one is much worse. I hope Bank Negara will take note - whether it comes under your purview or not.

The Ah Long industry is very big business. I am quite sure the Ah Long industry runs into the billions. 

The Ah Long cannot become so big just by lending RM50 or RM100 to the lower income people. They have many, many creative ways of getting "new customers". Here is one method.

The Ah Longs have "tied up" with businesses that sell consumer products like electrical goods, furniture etc on monthly instalment basis. 

In one recent case X went to buy some electrical goods (fridge, washing machine). Total amout about RM6000. The electrical goods shop said they can arrange the 'pinjaman' for X.  They gave a link to a Facebook page where the Ah Long (using a real Sdn Bhd)  lists the products and the "pinjaman" offers.   No information is given about the interest rates, the duration of the payment etc. Only the monthly payment amount is mentioned, about RM300+.  Most people who are simple enough to be taken in by the Ah Long only see the monthly instalment amounts. If it is affordable they often say yes.

The buyer X does not pay any deposit to the electrical goods shop. No receipts are issued. There is ZERO transaction record between the buyer X and the electrical goods shop.  The only transaction so far is saying Yes on the Facebook page.

Within a few hours the goods are delivered to the buyer X.  The delivery lorry gives the Buyer X a copy of an invoice with the Buyer's  name and address, the fridge and washing machine and the purchase price. The purchase price listed is not the same price listed in the shop earlier. It has the interest portion added. The RM6000 has become RM9,000. 

Bear in mind until this time the Buyer has not met the Ah Long, no need to show salary slips to process the pinjaman, no need to fill in any forms at all. ZERO.  The only written transaction is the delivery lorry's delivery invoice. That is all. 

A short while later the Buyer X receives a WhatsApp message from some mobile phone number. The WhatsApp message says pay the RM300+ instalment every month by such payment date. The bank account number is provided.  

And if you send a WhatsApp message to that mobile number or try calling them there is no reply and no answer.

There is no information in that WhatsApp message on what is the interest rates, how many months or years the Buyer has to pay, the tenure of the pinjaman etc. ZERO.  The only information is pay the RM300+ instalment by a certain date every month and the bank account number is provided. 

This is the Ah Long business model. They make it super easy to borrow money with zero documentation, no credit assessment, no need to show salary slips nothing. 

Until you miss a payment. Then the gangster debt collectors come calling.

The Ah Longs have penetrated not only the 12,000 kedai mamak restaurants but they have also penetrated the retail outlets selling consumer products like the furniture shops and the electrical goods shops. Maybe the Ah Longs themselves run these businesses as their own money lending fronts. 

That is why tens of thousands of people have become caught  in the trap with the Ah Long money lenders. Because the Ah Longs make it so easy to borrow money.

Hence the Ah Long industry is worth billions of Ringgit annualy. 

WHY DO THE AH LONGS EXIST AND HOW TO OVERCOME THE AH LONGS? 

The Ah Longs are stealing money from the people. Their high interest rates not only make ordinary people poorer but they are siphoning out such huge quantities of cashflow from businesses that there is little cashflow left over for re-investment and expansion. 

Ever since the Ah Longs came into being the economic growth of the economy has also been stunted.

The Ah Long industry is a multi-billion Ringgit industry. The Ah Longs - being illegal operators - also deny the Government billions of Ringgit in tax revenues from their highly profitable business.  Ah Longs do not pay taxes and neither are they regulated by anyone or anything. So the Government is losing billions of Ringgit in tax revenues to the Ah Longs.

Now WHY do the Ah Longs exist? 

The Ah Longs exist because around 20 years ago some very foolish economic advisers to the "ketuanan Melayu" gangsters felt that the Chinese presence in the banking and financial services industry should be "reduced". 

"On July 1999, Bank Negara Malaysia, proposed a major restructuring plan for its 71 domestic financial institutions to be consolidated into six".

In favour of a consolidated banking system where there would be only a few major local banks (SIX anchor banks) mostly owned by the government or GLC banks. The ketuanan Melayu banks. The ketuanan crowd felt that by restricting the banking licenses in the country they could also "control" the Chinese businesses. Obviously the retards were not taking their medication for their mental illness.

Question : Ok 20 years have gone by, so did you achieve what you set out to do? Have you kept the Chinese businesses "under control" What exactly does that mean ? 

(Just like all the Chinese owned bus companies in the Klang Valley which were made to 'disappear' around the same time - causing people to line up everyday at the bus stops every morning and even worse setting up a huge transportation GLC which has been making losses for what - about 20 years now? What have you achieved?) 

With the so called 'consolidation' of the banking sector the hundreds of finance companies, the credit and leasing companies, the 52 commercial banks disappeared. Now we only have a handful of banks left in the country.

So credit facilities for the rakyat marhaen also dried up. That is why that mamak restaurant fellow says : 

• banks “do not want to take the risk” with restaurant owners or retailers 
• retailers, unable to get financing from banks, turning to Ah Longs 

So the 'ketuanan Melayu' consolidation of the banks in the 2000s gave birth to the rise of the Ah Long industry.

So the Ah Longs have stepped in to fill up the vacuum. And the Ah Longs are here to stay. The Ah Longs are providing a needed service. They are lending money.

But the Ah longs are quite stupid. They are greedy. I can advise the Ah Longs on how to make even more money and how they will be really liked by the public.  

And as I said the government is losing billions of Ringgit in tax revenue to the illegal Ah Long industry. Ah Longs do not pay taxes. 

How do we overcome this problem? I have said this before. Please put back in place the banking and financial system we had in Malaysia in the 70s and 80s. 

The system was perfect. There was nothing wrong with the system. Our banking and financial system with commercial banks, merchant banks, finance companies, credit companies and other financial institutions were able to provide all levels of the Malaysian economy credit lending facilities at various levels of risk and capacity.  

There were much fewer Ah Longs at that time.

People could walk into so many banks, so many finance companies, so many credit companies and get financing facilities for any thing and everything.  That is how you solve this Ah Long problem.

Plentiful and easy access to credit is vital for economic growth. 

Before the 'ketuanan Melayu" consolidation of the banking sector, our GDP grew by 7%, 8% and 9% etc. After the 'ketuanan Melayu" consolidation of the banking sector our GDP growth has been sluggish. 

You can see the chart above (Malaysian GDP growth from 1962 - 2020 World Bank Data).

You can see (the black circle) until the 1990s, before the "ketuanan Melayu" inspired consolidation of the banking system in 1999- 2000s, the annual GDP growth rates in Malaysia were high, always above 7%.  Touching 10%.

Then after the "ketuanan Melayu" inspired banking consolidation (the light green circle) the GDP growth went down substantially. Consistently below 5%. 

Minus inflation of say 4% - 5%, our real growth is actually 0% or negative.

Tuan-tuan orang Melayu, tolonglah cuba faham. 

That is why over 290,000 Melayu bumiputra graduates are now unemployed.   There is not enough growth in the economy lah. There are not enough  jobs in the economy. Because there is not enough credit lending facilities in the Malaysian economy.  Tak cukup bank. 

Which "ketuanan Melayu" GLC bank wants to lend money to the kedai mamak restaurant? Despite the kedai mamak being a multi billion Ringgit business?

The "ketuanan Melayu" monkeys wanted to "control" banking so that they can "control" the economy.    Saya ada cadangan lain - kau orang pi sambung melanc@p saja lah. 

Sekarang Ah Long makin control financial lending. And the Ah Long dont pay taxes. Lagi kaya. 

Pi lah tanya adik beradik kau yang kerja  cuci janitor, kerja warong and kerja 'informal sectors'. (Informal sector kepala bapak kau - it actually means kerja tepi jalan, no regular working hours, no regular income.)  

All this has been caused by the ketuanan Melayu dunggus wanting to control the banking sector.

Pi mampus lah kau orang. 

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