Brunei Bank Debts
When I first started working in the mid 1980s, I was already fully exposed to the British banking system. I came back from England loaded with credit card debts and assumed that with my new salary as a newly appointed officer in the Brunei Government, I should be able to pay back the debts easily. I did pay it back but it wasn't as easily as I had imagined it to be. Because of that experience, for the first few years, I didn't open a new bank account or credit card account in Brunei, preferring to use the same bank account that my parents had kindly open for me when I was younger - even using some of the money that was already in there. After being in debt, I thought there and then, I am not going to apply for a credit card in Brunei, no siree, no...It wasn't until I applied for a Yaohan card (anyone remember Yaohan used to be in Brunei? What do you mean you don't know what a Yaohan is?) that I was forced to apply for a credit card with my bank, the red and white hexagon logo - H***. And I was told that before I could apply for a credit card, I was required to have a current account. I didn't know that. In those days, credit cards and current accounts are not something people in Brunei used much. To open a current account in those days is not very easy. I cannot just go to the counter and ask the counter staff that I want to open a current account. I have to bring an introductory letter from someone who already has a current account there and the bank will check to see whether you should be given one. It was a very difficult process. In a way it was good, all these are self controlling methods and if you don't want to go through them, means you really won't be able to build up any debts.
Fast forward to today. You can go to any bank's counter and open any account that you want. You can apply for any credit card of your choice. Every bank has one or even two or three different ones. It's up to you. So much so, that practically everyone has a personal loan, mortgage, hire purchase and credit card debts. The total loan in the country is some $5 billion. It became a headline after I gave a speech about it last year. That is roughly the equivalent of about every single household in Brunei owing $100,000 and that I tell you is a lot of money. It is very worrying. For example, a lot of us assumed that an interest rate of 6% per annum for a car costing $20,000 is not much. It's only $120 a month. But $120 a month for 7 years just for servicing the interest payment means your $20,000 will cost you $28,400 which is 42% more than the original value of the car.
When MOF restricted the amount of undefined personal loan (you can still go for education, mortgage loan, or any other type of loan etc without the same restriction), a number of people complained saying that it is their business if they want to go crazy on loans as long as they are willing to pay the moon for it. It is their personal thing. At the end of the day, I have to say that it is not a 'personal thing' - as experiences have shown that in most cases, debts spiral out of control especially when you spend a lot of the money in servicing the debt rather than lowering the amount of principal that you borrowed. Families have been known to break up because of financial difficulties. Children unable to continue their education. People go into drugs tyring to escape from their problems. Crimes rise. So it is not a 'personal thing' anymore once personal debt problems become social problems. And social problems have costs - affecting the development of the country. However the restrictions imposed by our MOF are still very lax and still insufficient compared to the ones in our neighbouring countries. That to me should be reexamined again and see whether not going into a more strict personal debt regime might cost us dearly in the future.
Comments
Because of the nature of my work(i needed a credit card in case of emergencies abroad) but i resisted using or applying for one and paid for everything in cash instead.
Finally, last month i succumbed and applied for a credit card at one of the world's local bank(you know where) and they approved it in a space of less than a week.
Initially, they gave me a limit of B$40,000. Yes, i was gobsmacked and licking my lips before reminding myself of my previous experience.So i asked the lady banker to give me a lower limit and we both decided on $6000.
I am very much afraid of using my card but i know from experience the credit in the card is what it is. Credit, not my money but the bank's and they charge you a whopping interest if you don't pay on time.
So moral of the story, don't get a credit card if you can't pay the whole balance off in time. Because bad debt sucks, big time.
And, it is the first time you have been overtly transparent about the government.
But why censor the bank's name?
I dont regred what I did in the UK that I spend so much and living on credit come to think about it since I do need the money to actually survive and spend a bit for myself. But that was then and now Im a reformed Credit Card ExUser. I have to be strict and excercise self controlled and live by the motto that of 'Spend What You Have and Spend Within Your Limits'
Bear in mind that my application was 'expedited'. To me, this is simply unacceptable because if they intend to promote their card, then they should be fully aware of their resources or lackof. I'm so positive that those who have not made their monthly installment payment would have received a notice of some sort by now, saddled with high fees and all that sort of trash.
But as a customer, I don't give a rat's ass if they have one million applications to process.
So, in the end, I cancelled my application. There are other banks out there and I'm quite sure that they'll be happy to accomodate me.
Sorry, I digressed but that really pissed me off.
Meanwhile, I'm only getting the card because I need it. I've been through the trials and tribulations that you guys are referring to here so I think that I've learnt my lesson.
That's my two cents worth.
Anyway, my heart actually goes to the lowest income earners. My banking friend once told me that these (low) earners genuinely need those loans particularly at the end of each year(just imagine a father with $1000 salary with 6 children trying to finance his school children- yes I'm talking about public school).
There is no doubt that the directive is beneficial in the long-run but in the short-run I think the government needs to think of something to alleviate the financial burden of those in the bottom income level. Already we see those exact social illnesses (the ones you described so well) are happening all around us.
What we need, I believe, is an all-rounder policies that can tackle issues both in the long-run and in the short-run.
But by closing my credit card I learn how to control my spending. The nice thing about no credit card, when I deposit $2000 cash for my hotel in Malaysia, at the end I still have cash money back to brunei as the holel retrun the deposit. At least I have money return to Brunei. No worries to pay the debt.
On the hand, I allocate and reserved my $3000 cash money in special account( this amount equivalent to my previous credit card limit). So when ever I need extra money, I will use my special account and I payback as I pay my credit card before. The good thing, there is no interest. But sometimes I have earning interest instead. :)