AKPK’s Head of Department for Corporate Communications, Mohamad Khalil Jamaldin during the exclusive interview with BERNAMA recently. He said, AKPK welcomes the public to come forward and seek advice before they commit to take on a debt so that they are fully aware of their financial ability. Pic: Rosli Awang By Jenny Imanina Lanong Abdullah
KUALA LUMPUR, Dec 16 (Bernama) — How many of us make it a habit to allocate at least ten percent of our monthly income to tide over emergencies?
Would we be at risk of having to deal with heavy debts if we do not take the necessary preventive measures? It is not too late to take the right actions now if we have not already taken the precautions.
Saving up for rainy days is not mere rhetoric. It is very important to allocate an amount of money for emergencies because failure in doing so will have a major effect in the future.
According to the counselling and Credit Management Agency (AKPK) since its establishment in 2006 and until 30 Sept, 2014, a total of 292,775 people have applied for counselling services provided by the agency and 115,706 for credit management.
These statistics reflect on the increasing awareness among Malaysians on why it is important to control their debts through financial education and guidance offered by the AKPK.
MORE MEN THAN WOMEN SADDLED WITH DEBTS
Looking at this year’s statistics up until 30 Sept, 106,391 individuals have sought help for managing their debts with most of them being men.
Some 46,453 or 43.7 percent of men of 40 years of age and above have sought counselling services for debt management with the agency.
This is much higher compared with men of 30 to 40 years of age, where only 42,219 or 39.7 per cent have done the same.
Meanwhile, 17,719 or 16.6 per cent of men who sought help in order to manage their finances were from the 20 to 30 years old age group.
“Before making the commitment to take on loans, it is really important to get the right information.
AKPK welcomes the public to come forward and seek advice before they commit to take on a debt so that they are fully aware of their financial ability. This service is free,” said the AKPK’s Head of Department for Corporate Communications, Mohamad Khalil Jamaldin.
NO EMERGENCY BUFFER FUND
According to the same statistics, some 22.8 percent of Malaysians failed to plan their finances, 16.2 percent are saddled with debts due to hefty medical bills while 16.1 per cent fell into the debt trap due to their failure in business.
Khalil suggested that if one could afford it, an emergency buffer fund should be established where the allocated amount equals to his or her expenses for three to six months.
“For example, if your salary is RM2,000 and your monthly expenses is RM1,000, the minimal amount that should be in the emergency buffer fund is RM3,000 to RM6,000,” he told Bernama recently.
EARLY SIGNS OF FINANCIAL CRISIS
According to Khalil to avoid from being too deep in debts, one should make sure that his/her total debts did not exceed 40 per cent of the nett salary. Therefore, a debt exceeding that amount meant that the individual was prone to having problems managing his debts.
Asked about how to tell if someone is facing financial difficulties, Khalil said the early signs include when the individual starts to borrow money from friends, make cash withdrawal from his credit cards to pay for the expenses or to pay for other credit cards installments or when he is only able to pay a minimal amount of five per cent of the total amount of his credit card debts.
People have to know that if they did not have any savings or insurance for any emergencies, they might end up with heavy debts, he said.
EARLY EDUCATION ON FINANCIAL MANAGEMENT
According to Khalil, credit and financial education were the answer to most financial problems that people face nowadays.
“At AKPK, we provide counselling and debt management services as well as financial education. AKPK aims at providing various educational services tailor made to assist individuals to control their financial conditions so that they will have a peace of mind by practicing smart credit usage,” he said.
Meanwhile, AKPK collaborates with education institutions in organising personal Financial Management to instill awareness among youths and encourage them to practice prudent financial management.
Trainees undergoing their stint with the National Service Training Programme (PLKN) are also exposed to the same financial education, a collaboration between AKPK and the Ministry of Defence.
“This is in line with our objective to start them young. This financial education should be instilled as early as possible so that more people know how to manage their finances,” he said.
In addition to that, Bank Negara Malaysia via AKPK has established the POWER! Programme (Your Money Management Programme) to encourage financial literacy among Malaysian consumers.
The programme’s target group is young adults between 18 and 30 years old, first time debtors and future debtors. It outlines effective ways to manage debts and make sound financial decisions.
DEALING WITH AKPK
Khalil emphasized that AKPK did not provide loans or financial funding but it helped members of the public via its credit management programme.
This programme caters to anyone who needs help in managing debts that they have with financial institutions regulated by Bank Negara Malaysia.
Explaining the procedure, Khalil said the public could go to any of the agency’s 11 branches or 12 counselling offices around Malaysia bringing with them several important documents namely salary slip or revenue slip, loan statements, credit report information (CCRIS) and the latest Employment Provident Fund’s statement (if needed).
“The customers seeking counselling should not have debts exceeding RM2 million, have positive income sources, and are not declared a bankrupt and are not under further court action,” he said.
During counselling, credit counselors will make an assessment on their income, expenses and debts and will work on restructuring the monthly installment of debts according to the person’s financial ability after getting the green light from the creditors.
“When the person agrees with the debt repayment plan as presented by the counselor, he/she should proceed in making the first payment ten days from the date he applied,” he said.
As soon as the first payment is received from the person, AKPK will inform him/her in writing of the application status and will also inform the respective financial institutions.
Next, the agency will issue an Offer Letter (Without Prejudice) for the person to sign as an agreement.
“AKPK calls on members of the public to get the right information before committing to take on a loan and also to equip themselves with the smart ways in managing their finances. Before taking on a loan, it is very important for the individuals to know of their financial ability or in other words live within your means,” he said.
For more information, AKPK can be contacted through toll free number 1800-88-2575 or at its website www.akpk.org.my