Sunday, October 4, 2009

Why are Ah Longs still able to function

I read in today's Star Online that "Ah Long transactions in Penang rake in RM15m" (

As reported, "The amount was derived after a series of police raids at strategic outlets where RM15mil worth of transactions were traced."

It also mentioned that "About 1,700 debtors are involved and most of them are either factory or low-salaried employees.

“These people probably could not obtain loans from the bank with their low salaries and decided to seek help from loan sharks. We have yet to paralyse their activities; so we will continue with the fight,” he told a press conference."

In that one statement, it shows that:
  1. enforcement or police action alone will not stop the Ah Longs
  2. people in general mismanage their funds so that they live beyond their means
  3. most people who live beyond their means prefer to borrow money rather than work harder to find other means of increasing their income
  4. that banks are also a cause for directing business to the Ah Longs by not providing loans to low income earners
So the simple approach to most problems like this where the supply of undesirable products and services has become a social ill is to reduce or eliminate the demand. Simple economics, yes? Therefore, the steps that can be taken are:
  1. continued police action
  2. proper financial management education so that people will be able to manage their money better, take fewer or lower (or better still none at all) loans for houses and cars and definitely NOT for consumer items
  3. provide opportunities for people to earn extra income (this of course is if the persons concerned are not too lazy to do so) and of course legally too
  4. that banks provide micro personal loans like those that the Ah Longs provide for amounts like RM 500 and 1000.
Of course, many also argue that banks are also Ah Longs but with a banking license, nicer office clothes and nicer buildings.

More ideas welcomed.

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