The Bankrupt Mat

Malays’ Current Money Habits Will See the Community in Financial Disaster.

Do this simple experiment when you have the time: stand by the side of a busy road in Singapore. Now count the number of cars that drive past and note down the driver’s race. You will soon observe that most of the time, 2 out of 10 cars will be occupied by a Malay family.

There may never be a proper poll on Malay car “ownership” but one cannot deny that lately there has been a surge in its number. Things like these are simply noticeable. 2 out of 10 is a very alarming statistic even for a straw poll, considering the race’s population makeup and socio-economic status. Malays make up only about 14% of our population, most of whom are not within the high income brackets. But “buying” a car seems to be the latest craze among Malays today.

Junior government officers, dispatch riders, clerks, traffic wardens, and even security guards - just some of the typical Malay professions who are now discovering that they can suddenly “afford” the ultimate middle class symbol. It used to be that Courts Superstore was the only place where Malay men would chalk up huge instalment plans on their frivolous purchases. But ever since the enactment of the $0 down payment allowance for cars, the Malay man’s obsession with instalments now includes his dream set of wheels.

Malay Money Habits

Malays have had dubious money habits since time can remember. Commerce and economic aspirations was never a regular feature of our culture. Accumulation of excess wealth is generally frowned upon as it’s considered avaricious and evil. Any excess that one has should be shared with the community. Malays are, after all a very communal society.

But the situation changed as time moved on. Realising the importance of success, a handful in the Malay community advanced themselves well socially and economically. They found good jobs and good positions in society. The quality of their lives improved and they soon could afford bigger homes and other symbols of the middle class like cars and fancy home interiors.

Inadvertently, the growing affluence of this relatively small group of Malays bred silent resentment among the rest. Pressure grew among the majority members of the Malay community to keep up with their well-to-do relatives and friends. They too wanted the middle class symbols like cars and fancy home interiors. Materialism slowly becomes part of the Malay culture in Singapore. It doesn’t matter if people had to borrow money to get these symbols, as long as they kept up.

Today easy credit is available wherever you go. The booming economy is seeing Malays happily lapping up symbols like cars, home renovations, and fanciful weddings – on credit. I personally know a poly grad friend who recently took out a $30k loan to fund a lavish wedding reception complete with a live bands and a famous DJ. And yeah, a car loan is on the way for him too.

Chaps like him are not uncommon today. Many of our youngsters are indiscriminately taking on numerous credit cards and needless car loans. If the situation is left unchecked, the community will be self-destructing financially in the near future. Already the signs are there. According to a figure by the credit bureau, Malays now make up the biggest chunk of personal bankruptcy rates percentage-wise.

All it takes is for the economy to go into another prolonged recession before the rest check into the poor house. This will have serious implications for all of us as Malays are a relatively poor community to start with, struggling to build even our mosques and madrasahs. Something needs to be done and it has to be done soon.

Four “I”s of the Malay Money Habits

Malay Money Habits are characterised with the following 4 ‘I’s. They are namely income impairment, imperative to impress, inclination to credit and imprudence in financial matters.

1. Income Impairment

It is well known that Malay workers do not earn as much as their counterparts due to their education level. The majority of our young professionals enter the workforce with only an ITE certificate or Polytechnic diploma, drawing mediocre salaries with nominal yearly increments. On top of that, our community is still dealing with a large number of premature school leavers. Most have no impetus to neither carry on studying nor improve their earning capabilities and are set for a life of perpetual mediocrity.

However the need to feel like a member of the middle class runs high and meagre income earners bridge this disparity by taking on loans. Today, more and more meagre income earners are proudly driving around in brand new cars clouded by delusions of grandeur.

In a retirement survey conducted by AXA, it is discovered that a large percentage of Singaporeans will NOT have enough to retire on, despite the government raising the minimum CPF level to $120,000 by 2013. Needless to say, those in debts today will find themselves in a very grave situation tomorrow. Sadly, most Malays have not woken up to this fact.

2. Imperative to Impress

There is a very old but notorious motto that a lot of Malays live by. It goes “Biar papa, asal bergaya”. (Let me be broke, as long as I look good).

This need to look good is a powerful force indeed. It is the same force that drives many Malays to breaking their banks every Hari Raya. Spunky clothes and accessories, classy interiors and the latest home entertainment system are a must when friends and relatives come over to visit. To most Malays, debt is something that you can think about later, what is most important is to look impressive in front of others now.

If you head down to a public car park opposite Jalan Afifi on any given day, you will find a stable of about brand new cars – all belonging to CISCO security guards from the HQ building opposite. I’ve been observing them for quite a while now as I pass by the car park on trips to the swimming complex.

Right here where I live at Eunos Road 5, we have two Malay parking wardens who issue parking summons– in their own cars. I find it hilarious though that when they park their vehicles, they themselves do not display parking coupons but yet go around issuing summons for it.

I’m singling out these security guards and parking wardens not because I am demeaning the professions. But I feel that having an entire platoon of Malay security guards and Malay traffic wardens who drive around in their own cars; it’s a sure sign that ours is a community heavily laden with debt. Trouble is brewing.

3. Inclination to Credit

When I was ten-years old, I had a religious teacher that really hated me. One day, she unwittingly whined that the class shouldn’t demand a children’s day treat from her as she has not paid her car instalment for the month. I knew very well that Islam forbids both the taking and payment of interest. That was the reason why I quizzed her innocently about the interest that she’s paying on her car loan. Needless to say she made my life in class miserable from that day onwards.

It’s menial but true. Most Malays’ definition of “affordable” applies to the monthly instalment figure. As long as the monthly instalments can be made it is considered “affordable”, ignoring a very specific injunction in Islam to avoid paying things on instalment if interest is involved.

I’m not sure exactly how this culture came about but this is the exact mentality that most Malays adopt when they step into places like car showrooms and furniture stores. It is the same mentality that has put so many Malay families in dire consequences.

This mentality has to change. It is a culture that has been around for so long that other communities are making fun of our living-on-instalment ways. Malays must train themselves and their next generation to stop looking at the monthly instalment figures when making a purchase. If you cannot afford a liability in cash, you cannot afford it, period.

4. Imprudence in Financial Matters

People who understand financial matters are still few and far between in the community. Despite being university graduates, I have seen a few friends who got themselves trapped in negative equity situations while buying property. Worse, many still are not even aware of what terms like “negative equity” means.

In today’s complex economic climate, it is not enough to just be highly educated. It is more important to have a sound financial knowledge. The average leader of the household must be able to tell the difference between a bad debt and a good debt, the different types of mortgages and its pitfalls, and basic mechanics of the world’s financial markets.

Not only will these skills make Malays less susceptible to moronic money decisions that could lead their families into trouble, but they will also find themselves in a better position to benefit from it.

Action Now

Malay financial delinquency is an issue that has not received enough attention by the community. Perhaps they think that it’s an issue that needs no immediate arrest as compared to other more pressing dilemmas. Already our leaders are battling a host of social problems such as teenage pregnancy and single parenthood.

But the irony is, a financially dysfunctional community is the perfect breeding ground for more of such social problems in the future. More resources must be devoted to educate Malays, especially the young men, on financial responsibilities and sound spending habits.

A local newspaper reported not too long ago that there has been an unprecedented increase in the number of Malays applying for Zakat (alms), most of whom are young Malay men in their twenties. If that is not a wake-up call for the community, I do not know what is. If we let this problem go unchecked, a majority of our Malay families in the future could be led by a Bankrupt Mat as the head of the household

Postscript

Being in the twenties myself, I understand the temptation to be behind the wheel sometimes. Yes, it’s pretty swell to drive up your date to a nice romantic inaccessible-by-public-transport beach after dinner for a nice chat under the stars. Yes, having a car at your command does have its perks. But being plagued by debt and liabilities should not be one of it.

An alternative that I personally use is the automated car sharing services. Using your mobile phone, you can activate one of many cars all over the island with just one SMS. The cars are new, clean and come in a wide variety of models to choose from. You get to drive all makes and brands while a car owner would usually have to be contented with the one he “bought”.

But best of all, you worry nothing about the monthly instalments, road tax, insurance, maintenance, breakdowns etc. Though I drive most weekends, my car bill rarely exceeds $100 a month. With the money you saved, you will soon find that a car is within your means, cash, by the time you’re 35 – if you really need it.

On a more interesting note, women seem to make much more financial sense than their male counterparts. In casual conversations, most of the tertiary-educated Malay ladies I know have told me that they do not admire men who drive. (The same cannot be said of the lesser-educated ones though).

According to one, starting a family with a car-bearing male is equivalent to starting a family saddled with debt, right from the start - a very dangerous concept indeed. It just takes one unforeseen disaster such as a serious illness, an accident or a retrenchment, before the entire family descends into a total financial shamble.

Maybe Malay men should drop their ego and listen to their ladies more.