What new initiatives is AKPK involved in?
KOID: We have three core services. One is financial education. Then we have credit counseling and debt management. We have a look at all of our services and how to make them better for the consumers in Malaysia. For debt management, we are going to provide for access to our services from home, so it can be done through the internet. The application forms are posted on our website. Consumer can download the forms, fill them out, and submit it to our counselors. At this time we need them to be aware of what documents we look for from them. We need them to know and understand their income, expenses, debts, and assets. Also, very often we find that consumers can be assisted just by credit counseling. Sometimes they have the assets, but they are possessive and want to hold onto their assets. So they do not realize if they liquidate some of their assets it can be beneficial. For example, it they have three cars, and they were to sell one car, with the money they can settle some of their debts. However, they need our counselors to be point that fact out to them. Another initiative for credit counseling we are hoping to expand is with the phone. This year we have established our own call center, and we are ready to take calls from the public. Even if it is three hours, we will spend three hours on the phone with the consumers. These are credit counseling initiatives. From the financial education aspect, we have taken multiple channels. Going forward with the advancement in IT, we have our financial education module online. We call it the POWER! program, and there are six chapters. Instead attending classes here for four hours, young, adults from the age of 18-30 years or even from outside that age group, they can also go through the POWER! program to enhance their skills in personal financial management. In that program we start with budgeting cash flow, when you want to buy a house or car, what are the considerations and wise use of credit cards. These are targeted at young adults before they get into debt. The approach is pre-emptive rather than for them to be caught in the debt trap. We want to educate them early on the pitfalls of being over indebted.
Which of the services that AKPK has provided have had the most impact?
KOID: For me, the most impactful service provided by AKPK was when we first started in 2006. We are helping the over indebted consumers, and we give them an avenue to help them solve their problems. We let the consumers know that they are not alone, and AKPK is there to help them. In our program, what happens is that even if the consumer has multiple loans from many lenders they can come to us, and we will assess the situation. Firstly, they must have net disposable income to pay their debts. If MYR 800 ($248) a month is not doable for the consumer, we will negotiate with their lenders, who are all under the purview of Bank Negara, for a lower amount. So instead of MYR 800 we can have MYR 300 ($93). For example, if you have six lenders, we can negotiate so it can be at MYR 50 ($15) per lender. Then we lengthen the period of payment. For most of these cases, the penalty interest, and finance charges will be waived, so it is something the consumer can afford. At the same time, the bankers are happy because they still recover the money or at least the principal. I think that has been very impactful. At present, we have about 50,000 active customers under this program.
How easy is it for consumers to gain access to credit?
KOID: In Malaysia, access to credit is very easy. However, we want the lenders to be responsible. We do not want them to push credit to the consumer who cannot afford it, or push credit that is not suitable. For example, a customer applied for a MYR 10,000 ($3,093) personal loan. After checking on the person’s background, the bank very generously gave MYR 40,000 ($12,375). The consumer was very happy thinking that the bank respected him to give him MYR 40,000 instead of the MYR 10,000 he applied for. Of course, being a personal loan, the consumer had readily used up the MYR 40,000 and then turned up at AKPK.
Does AKPK have a presence outside of Kuala Lumpur?
KOID: We have ten branches throughout the country. Also, to save costs, we have collaborated with existing bank branches at particular locations. We call it a credit counseling office. In Klang, we are with Maybank, where we use their branch every Thursday. We let the consumers in Klang know we will be there on Thursdays. In Seremban, we have just started with an HSBC branch. The ten branches we have now are encouraged to actively reach out to the community in their region. So AKPK is not only in our head office in Kuala Lumpur. Our ten branches throughout the country are reaching out to the community. Many times the branches are started by people from that specific locale, so they know the people. They can better facilitate and serve the consumers who come to AKPK for assistance.
How is AKPK expanding to target the various types of communities in Malaysia?
KOID:Firstly, we have targeted the various communities and now we have our programs in Mandarin and in Tamil. We have dedicated officers for these. In AKPK, credit counselors, even over the weekends, can become trainers. So we pool all our resources together and reach out to the target community. We have our literature in Tamil, and presentation can be in Tamil. In our call center, if you are Chinese, Mandarin, or Tamil speaking you can call our call center. Our core agents will be able to cater to that. Now that we are going to reach out to the remote areas in Sabah and Sarawak, we are prepared to translate our literature in the local languages.
What areas is AKPK focusing on to empower consumers?
KOID: In this respect, a well informed and financially literate consumer makes a better consumer. We are in the financial industry, so the role we are playing now is to educate our consumers. Firstly, they must have good product knowledge, and we encourage them to comparison shop for the best product to suit their needs. This is the area we are focusing on to empower the consumer to make informed financial decisions. In this sense the bankers will also be better off as it is easier to deal with consumers who understand their loan obligations.
What approaches is AKPK taking to provide financial education for consumers outside of the AKPK office?
KOID: We provide financial education at the workplace. Our targets are employees and groups of people that want to enhance their financial capability. For this, we market to the employers or corporations. We explain that employees who are debt free and free from financial stress are more productive. This has been a very good marketing approach. To further motivate employers to provide financial education at the work place, we have arranged for those expenses to be HRDF (Human Resources Development Fund) claimable. This is a fund set up by the Ministry of Human Resources. The financial aspect is taken care of and at the same time the employers get to have more productive employees, so these are very persuasive reasons for corporations to provide financial education at the workplace. These are the approaches we are taking.
In Malaysia, access to credit is very easy. However, we want the lenders to be responsible. We do not want them to push credit to the consumer who cannot afford it, or push credit that is not suitable.
How does this benefit the employers?
KOID: Employees who are financially literate and can manage their finances better know how to seek assistance to resolve their debt problems and they will be more productive. In that way, the employer will benefit from productive workers.
How is AKPK marketing their services to consumers?
KOID: A recent survey conducted by the Central Bank indicated that only 14% of the population is aware of AKPK. We are trying very hard to take up the challenge and further promote AKPK’s services. For this purpose we have rebranded AKPK. Instead of saying that we are a credit counseling and debt management agency, which is quite a mouthful for many consumers, we focus on using the acronym AKPK. Other than that we have introduced the personal financial management modules in 74 institutions of higher learning. It is an elective subject, and it gives one credit hour. Other than introducing this to the universities, colleges and institutions of higher learning the challenge is figuring out how we promote the module for the students to take up as an elective.
What is AKPK’s POWER! Program?
KOID: Last year, together with the Central Bank, AKPK developed this POWER! Program for young adults. It is being translated into English, Mandarin, and Tamil. We are now conducting classes in four languages. It is very good for young people to know before they take on debts, they must understand what it involves. They need to know their rights and responsibilities. At the end of the session they get a certificate of attendance. With the certificate of attendance, whenever they apply for a loan they can also submit the certificate so bankers know that this person understands his financial obligations when taking a loan.