CONSUMER AND BUSINESS CUSTOMS IN MALAYSIA

CONSUMER AND BUSINESS CUSTOMS IN MALAYSIA

Much of Malaysia’s national policy—in education, government spending, industrial planning and language— is oriented towards making Malaysia strong economically and a competitor in the global marketplace.

English widely used. Younger people tend to be very Westernized, older people are often much more conservative. However in places where Islamist ideology is strong the reverse can true. Businessmen have traditionally been well connected to politicians. Business people are sometimes are survival course in the rain forest to "revitalize" them.

Saving is no longer as important as it once was. Spending and consuming are on the rise. Already in the early 2000s, Malaysia was consumer-oriented society. Household credit as percent of GDP (2002): 53 percent. Number of credit cards person (2002): .27.

Greetings, Meetings and Business Cards in Malaysia

According to kwintessential.co.uk: “Within the business context, most Malaysian business people are culturally-savvy and the correct approach may depend on the ethnicity, age, sex and status of the person you are meeting. As always, the best approach is always friendly yet formal. [Source: destination-asia.com, kwintessential.co.uk]

The initial greetings should be formal and denote proper respect; if in a team, introduce the most important person first; many Malays and Indians are uncomfortable shaking hands with a member of the opposite sex; it is important that professional titles (professor, doctor, etc.,) and honorific titles are used in business. Foreign men should always wait for a Malaysian woman to extend her hand. Foreign women should also wait for a Malaysian man to extend his hand. To demonstrate respect Chinese may look downwards rather than at the person they are meeting. It is important that professional titles (professor, doctor, engineer) and honorific titles are used in business. Malays and Indians use titles with their first name while Chinese use titles with their surname.

Business cards are exchanged after the initial introductions and if you are meeting Chinese people, have one side of your card translated into Chinese, with the Chinese characters printed in gold. If you are meeting government officials, have one side of your card translated into Bahasa Malaysia. When presenting a card use two hands or the right hand to exchange business cards. Also, examine any business card you receive before putting it in your wallet or card case. This etiquette is important as the respect you show someone’s business card is indicative of the respect you will show the individual in business. Act accordingly. Never write on someone's card in their presence.

According to kwintessential.co.uk: “It is a good idea for the most senior person on your team to enter first so that he or she is the first to greet the most senior Malaysian. This gives face to both parties as it demonstrates respect towards the Malaysian and shows that you respect hierarchy within your company. It is customary for leaders to sit opposite each other around the table. Many companies will have their team seated in descending rank, although this is not always the case. Expect the most senior Malaysian to give a brief welcoming speech. You need not reciprocate. There will be a period of small talk, which will end when the most senior Malaysian is comfortable moving to the business discussion. Meetings may be conducted or continue over lunch and dinner. Meetings, especially initial ones, are generally somewhat formal. Treat all Malaysian participants with respect and be cautious not to lose your temper or appear irritated. At the first meeting between two companies, Malaysians will generally not get into in-depth discussions. They prefer to use the first meeting as an opportunity to get to know the other side and build a rapport, which is essential in this consensus-driven culture. [Source: kwintessential.co.uk]

Chinese and Business in Malaysia

The Chinese have traditionally dominated business in Malaysia and run shops and hotels. Many are descendants of laborers who worked hard and saved so that succeeding generations could prosper. Many are self employed. In the 1970s, Kuala Lumpur about 90 percent of all the shops, banks and factories are were owned by Chinese and Chinese businessmen still control a large share of the commercial enterprises. These days bumiputra (Malay) billionaires run much of the economy rather Chinese billionaires. Ethnic Chinese tycoons were hit hard by the Asian financial crisis. Many remain technically bankrupt.

Chinese are known as risk takers. Their thinking sometimes goes that opportunities are rare and they must be pursued aggressively when they occur. Whole families will sometimes invest great sums of money on the chances of one member to get ahead. And, there is often an emphasis on getting rich while you can. Chinese businesses have been criticized for going after quick profits rather than looking out of the long term interest of their companies.

When starting a business Americans often go to the bank for a loan, Chinese go to friends and relatives, maybe getting the equivalent of $1,000 from one person, $2,000 from another person and maybe twenty thousand from a close relative. “We trust each other, so no interest. He know I do the same for him one day."

Many Chinese business owners like to run their companies on instinct and with total central control. They shun excessive meetings, don’t field questions, don’t provide explanations and don’t tolerate a lot debate. With a firm, centered hierarchy many Chinese feel that workers spend more time talking than working. Those that have become hugely successful have often done so by controlling supply chains in their business.

John Howkins wrote in The Australian,” Marketing and PR are primitive. Reputations can rise and fall without much base in reality. Newspaper coverage favors those who have government connections or pay for it. On working in China, the film producer Ismail Merchant said. “People don’t like saying “yes” here. They think about things, and say you can’t do that when there a shooting schedule to keep.” Architects working in China voice similar complaints.

Family Style Chinese Businesses

In his book The Spirit of Chinese Capitalism, Gordon Redding wrote, "The Chinese family business...is peculiarly effective and a significant contributor to the list of causes of the East Asia miracle." Chinese-owned companies are often family run and have family members, other relatives or family friends in all the management positions. This contrasts with Western corporation which generally rely on professional managers. One Chinese businessman told the Washington Post, "We mostly hire people because he family knows them, or because they're introduced by a family member. That way you can find someone you can trust. Chinese find it not so easy to trust other people."

Many Chinese companies are run by old patriarchs backed up by Western-educated sons and daughters. The Chinese family system is much more effective in simple organizations like shipping, real estate and the production of low-market goods such as shoes and electronic but is not as effective in sophisticated organization that spend a lot on research and development and design high-tech products.

Confucian thought adapts itself very well to the hierarchical management style. One of the key components of a Chinese family-run business is trust. The Chinese have a reputation of distrusting people outside their clan or circle. The advantages of the Chinese family system of business are that it keeps management size down and allows quick decisions to be made without lengthy meetings, which in turn allows companies to move quickly into profitable markets. The disadvantages of the Chinese family system of business are that favoritism keeps talent out and family feuds can bitterly divide a company especially after a patriarch dies.

Modest Chinese businesses like noodle restaurants and small shops. are run by husband and wife teams, with children providing labor. Women often play an important role in organizing the finances. Explaining how such a business gets started one Asian businessman told Stanley Karnow in Smithsonian magazine: "Americans make big investment, hire manager, technicians.” Asians “cannot afford that, but wife and children all work hard. At first I keep old job while wife and friend take care of store; later I quit to run business full time. Until last year we are here seven days a week, sometimes until 2 in the morning. Now we are doing OK, so we take Sunday off."

There are critics of the Chinese family business model. One Chinese businessmen said that many Chinese businessmen suffer from “Chinese restaurant syndrome” in that “they are content with small-scale enterprises; they are happy to making a living. But Jewish people want to be the best and make a huge company.”

Ah Longs: Malaysian Loan Sharks

Ah Long is a colloquial term for illegal loan sharks in Malaysia and Singapore. They lend money to people who are unable to obtain loans from banks or other legal sources, mostly targeting habitual gamblers. Often, they discreetly advertise by sticking notices, mostly on lamp posts and utility boxes around a neighbourhood, thus vandalising public property, as authorities have to then remove such advertisements. They charge very high interest rates (generally about 40 percent per month/fortnight) and frequently threaten violence (and administer it) towards those who fail to pay in time. [Source: Wikipedia]

When a person fails to pay in time, the Ah Long will spray paint, splash, or write threats in paint or markers on the walls of the house or property of that person as a threat of violence and to scare, and perhaps even shame, the borrower into repaying the loan. A common use of painting includes the characters "O$P$" meaning "owe money, pay money", as well as the debtors' unit number. According to local police authorities, there have been cases where borrowers and even their family members were beaten or had their property damaged or destroyed, and some victims have committed suicide. In other cases, flowerpots placed outside the debtors' units were smashed, debtors' house gates have been tied up with cable ties and at the extreme, debtors' property such as their house door/gate or their cars have been burnt.

Pig heads are sometimes hung outside the borrower's house, as a type of intimidation as well as a way of 'marking' the person as a loan 'defaulter'. Ah Long sometimes break into victim's houses and steal items of the loan's value. This method is commonly used to save time and also effort. Recent cases shows that Ah Longs also display the borrower's identity card on a huge banner and post it on fences. Since Ah Longs need only an identity card from borrowers, this tactic is becoming common because it shames the borrower publicly into paying up. Borrowers often use outdated identity cards to borrow money, with the intent to not pay what they owe. As a result, unsuspecting house owners end up paying the price of receiving the Ah Long tactics of intimidation. Since they are not the borrowers, the intimidation does not stop and the Ah Long will keep on harassing them.

Frequently Asked Questions About Ah Longs

The blog Sam’s Alfresco Heaven reports: 1) How much can I borrow? As a new client, the most they give you is $500. Some need gurantor, some don't need. Once you settle this $500, they will increase your limit so next time you need, they can loan up to $1000. As time goes by, $3000, $4000 also can loan. 2) What is the payment like ? Different syndicates different methods. Some will deduct the 20 percent interest from the loan amount upfront. eg. $1000, you take $800. Some give $1000 loan but take back $1200. 3) How long is the payment ? Normally is 4 weeks. eg. $1000 = 4x$250 or 4x$300 Some gives you 5 weeks. eg. $1000 - 5x$200 or 5x$240 [Source: Sam’s Alfresco Heaven, March 3, 2009]

4) How many loans can I get ? Some ah long give you up to 3 loans. eg. 3 loans of $500. Some will intro their "colleagues" and you get loan from them. But actually is all same syndicate. So without you knowing, you might be borrowing $6000 from 3 different ah long but all same syndicate. 5) How to get ? Call them up, they will ask for your NRIC, address, name. Then they will go check their database to see if you are a bad debtors. Once clear, they will send a runner to meet you to check your IC. Some kiasu will meet you at your door to make sure you really stay there. The runners will also do an inspection on your unit to see if there are any previous ah long markings. This means you are a bad debtor with another syndicate. Verification will cost about $10 or $20 payable in cash to the runner.

6) What if I miss one installment ? They will term it as "cut". Meaning you add another week of payment. eg. $1000 loan = you pay 2 weeks of $200 (Remaining 3 weeks). But 3rd week you cant pay, means they add one more week. So now you still left 4 weeks of payment = $800 7) What if I cant pay on the deadline? Some ah long can neg. give you one or two more days. If cannot neg, then refer to point; 8) What if I didnt answer their call ? You better answer, cos if the deadline they never hear from you, means you run road and actions will be taken

9) What kind of actions ? Actions range from splash paint at your door, scribble o$p$ at your lift lobby. Worse is splash paint at your neighbour doors. (Just apologise and help the clean up) Worst is set fire on your door or splash paint at random cars. 10) What do I need to do if point 9 happens ? First dont touch anything, Call police, lodge report, let them take photo. Then clean your gate and door using thinner. Call town council for their cleaners to come re-paint those writings on the wall. This is F.O.C. 11) What prevention measure can I take ? Wrap plastic sheets on your windows and doors. Normally they see wont splash cos waste of time. But they might target your neighbours house. Install CCTV cameras. But is to deter those newbie runners. Hardcore runners wont even hack care if their face is shown. Some wear helmets, umbrella and mask so CCTV no point also. 12) When will it ends ? From experience, I think they come up one time splash paint, you never response, they will stop cos no point also.

New Dirty Tricks of Ah Longs

Cao Baoying wrote in My Paper, “A new tactic being used by loan sharks to pressure debtors was exposed on Stomp this week. Now, instead of harassing just the debtors, the loan sharks also send hell notes threatening harm to their neighbours. Stomper Zubin wrote in to Stomp after receiving hell notes in his letterbox, accompanied by a threatening letter warning that "something nasty" would happen to him if his neighbour did not pay up. Zubin mused about how "Ah Longs" these days do not simply shout and threaten people with parangs. Instead, they are getting more organised and "even bother spending 26 cents" on a stamp to send hell notes and letters to the debtors' neighbours. This is just one of the e-mail messages that Stomp received recently about the evolving tactics of loan sharks. [Source: Cao Baoying, My Paper, January 5, 2013]

One new tactic employed by loan sharks is to transfer money into victims' accounts, before demanding that they return the cash with interest. Stomper Kenji, who was one such victim, was shocked when he received a text message from an unknown person, informing him that a loan of $380 had been transferred to his POSB account. The sender also demanded that Kenji make weekly repayments of $160. Kenji later received a call and was told that if he did not pay up, his parents would die. The Stomper decided to make a police report.

Stomper Cool Sapphie received a phone call asking her to take up a loan. She said the caller identified himself as a loan shark, and added that he knew all her personal details. He asked her to "pay him weekly till he's happy", or pay a one-time sum of $3,000 to settle the matter. Sapphie refused and reported the matter to the police. However, the caller still threatened her, and said that there was no point reporting the matter to the police. She wondered how innocent parties could be threatened in this manner, and how her details were leaked.

A month after Stomper MS moved into a flat in Toa Payoh Lorong 8, the police informed him one night that a fire had occurred outside the unit. MS found out later that the fire was probably started by loan sharks, who were harassing the former owner of the flat. Unfortunately for the Stomper, the loan sharks did not seem to be aware that the debtor had moved out. The Stomper, who has a seven-year-old daughter, is worried about his family's safety. MS hopes his Stomp report will make it known to the loan sharks that the flat has changed hands. The Stomper feels that he should not have to live in fear because of the irresponsible attitude of the former owner and the loan sharks' viciousness.

In February 2013, The New Strait Times reported: “A woman and her family are living in fear as they are constantly harassed by an Ah Long (loan shark) group because of the husband's debts. Their house here was broken into by three men, who took cash and jewellery. The suspects were believed to be members of the group. The woman, who wanted to be known only as Suzy, in her 30s, said she was awakened by an explosion in the 5.30am incident. At first, she thought it was firecrackers, but then she saw the three men, armed with guns. "One of them pointed his gun at me and ordered me to sit on the floor while the other two entered my daughter's room. "All of them wore masks. They ransacked the house and took away my personal belongings." At the time of the incident, her three daughters, aged between 7 and 13, were at home. Her husband, a hawker, was away. "They left behind 10 bullets, two hand grenades and drugs. They also warned us not to lodge a police report," she said, estimating her losses to be more than RM30,000. Manjung district police chief Assistant Commissioner Jaafar Baba confirmed the incident and said police were tracking down the suspects. [Source: New Strait Times, February 1, 2013]

Chettiar Moneylenders

Before banks and and Ah Longs became widespread, the Chettiar moneylenders were the ones that people in debt turned to when they needed. But in recent years they have largely disappeared. Revathi Murugappan wrote in The Star, “Once upon a time, moneylenders, decked in white dhotis and cotton tops, operated from a kitenggi (business premises in a shophouse). Sitting cross-legged on the floor, behind a low desk made of hardwood, the Chettiar moneylenders would wait for clients with ledger books in hand and a smile on the lips. Inside the desk were stacks of cash, pen, paper and more accounting books. Everyone was a worthy client and no one was turned away. [Source: Revathi Murugappan, The Star, July 18, 2009 /~/]

“Typically, the Chettiars were traders, and those who arrived in Malaysia during the pre-war days were usually moneylenders. They reigned supreme in business but have over the years faded away, what with the emergence of banks, financial institutions, Ah Longs (loan sharks) and credit cards that offer cash advances. Presently, there are more than 3,400 licensed moneylenders nationwide, but it’s believed that only a handful comprise Chettiars. In Malaysia, individuals wanting to apply for a new moneylending licence must have RM1mil in paid-up capital. The interest rate is fixed at 18 percent per annum for unsecured loans (without collateral) and 12 percent for secured loans. /~/

“Banks offer a better interest rate but require clients to show documents to prove job stability and ability to pay back. It’s a lengthy procedure with lots of paperwork. With loan sharks and licensed moneylenders, however, the red tape is significantly reduced.” /~/

“Customarily, Chettiar moneylenders set aside a percentage of the profits as a gift in the name of a deity. The food prepared every day at home is dedicated to the deity. Offerings are also made in temples, after which the food is distributed to devotees and the poor. “Whatever business Chettiars do, they give donations to temples and gifts to charity because taking money from others is a sort of sin for us. In our accounts, we always open a deity’s account,” Ganesan points out. There are 17 temples around the country that are funded by Chettiars. /~/

History of the Chettiar Moneylenders

Revathi Murugappan wrote in The Star, “According to Datuk N. Ramanthan, chairman of the trustees of the Penang Nattukottai Chettiar Temple, moneylending was the clan’s main business before the war but after that they also dabbled in plantations from lands given to them as collateral. “When borrowers couldn’t pay up, Chettiars seized the land, cleared the jungle and turned it into plantations. It was a lucrative business.” [Source: Revathi Murugappan, The Star, July 18, 2009 /~/]

“When new laws were enacted after 1957, the government only issued moneylending licences to Malaysian citizens. Hence, a lot of the Chettiar moneylenders who weren’t citizens found themselves in a spot. “They had to have agents to act on their behalf and over time, some of them returned to India because they couldn’t maintain their business anymore,” he says. The rest ventured into other businesses, namely buying property and renting out the premises. Many of the next generation became professionals like accountants, architects and doctors. The existing Chettiar moneylenders are finding it difficult to sustain their trade. “The Chettiars have lost faith in the business so that could explain why the numbers are dwindling. The moneylending industry is polluted by others who offer all kinds of services,” reckons R. C. Veeraseelan, president of the Malaysian Moneylenders Association, an organisation that safeguards the welfare of moneylenders. /~/

“Initially, moneylending licences were issued by the high court, then the Ministry of Housing and Local Government took over, and after that the state governments. However, when various problems surfaced, the ministry took over the reins again. The Moneylenders Act, 1951 was amended by the Moneylenders (Amendment) Act, 2003. Prior to the amendments, moneylenders were defined as “persons who carry on, advertise, announce or hold themselves out in any way as carrying on the business of moneylending . . .” /~/

“The Amendment Act has, however, significantly expanded the definition of “moneylenders” to any persons (companies or individuals) who lend sums of money to borrowers in consideration of larger sums being repaid to them. Licensed moneylenders give priority to government servants, public-listed companies and stable companies, and loans are usually approved in less than 24 hours. People whose loans are rejected are usually those in the low-income bracket. “These are the petty traders who have nowhere to go to seek funds. Our risk analysis shows that 20 percent of them wind up businesses and are written off as bad debts. We cannot cater to them because the risk is too high. So they resort to Ah Longs, who even provide home delivery,” Veeraseelan says.

He feels the ministry should come up with “new products” because the moneylenders’ interest rates have not been revised since 1951. “It’s still the same, and survival in the business is not so easy anymore.”

Last of the Chettiar Moneylenders

Revathi Murugappan wrote in The Star, “The only remaining licensed Chettiar moneylender in Klang is Ganesan Nagappan, who is continuing his late father’s business, which was set up in 1964. “Our business is based on trust and risk,” says the 52-year-old who has been in the business for more than 30 years. He now operates from home, and the family kitenggi is only used for religious events. Ganesan works from home now as the family kitenggi is used for religious events. [Source: Revathi Murugappan, The Star, July 18, 2009 /~/]

“These days, Ganesan only services old clients. Because defaulters may make up to 30 percent of the clientele, he rarely accepts new clients, except through recommendations. Five years ago, he’d have five to 10 potential clients dropping in daily, but now he hardly has 10 in a month. “We’re at the losing end because the law is not helping small-time moneylenders. The integrity of the profession has gone since unscrupulous moneylenders joined the industry. Moreover, for every renewal, the government requires that we show a RM100,000 deposit. In the past, we only had to show the old licence to get a new one,” he laments. It’s a good business, as long as the clients pay back. “I’m doing it on a small scale just to survive but I don’t think any of my three kids will take over.” /~/

“T. Annamalai, 55, from Malacca surrendered his moneylending licence in 2001 because the going got tough and he lost a substantial amount from defaults. “Society is changing. People are dishonest and don’t seem to have a conscience to pay back anymore,” he says. “As people’s needs increase, they want more luxury. A lot of men borrow money without their wife’s knowledge and prefer going to Ah Longs because it is easy. I know of a few cases where clients needed money to support their mistresses.‘‘ When the loan sharks chased after them with threats, borrowers would then resort to scrounging from Chettiars to pay the Ah Longs. “We don’t use strong arm tactics so they play hide-and-seek with us. Ultimately, we cannot recover the money and have to find other means to derive income,” Annamalai says. Annamalai was born in India but came here when he was four. His grandfather was a moneylender, as was his father who inherited the business and passed it on to him. Now, it has died a natural death. /~/

Methods of Chettiar Moneylenders

“When someone approaches us for money, we have to assess his character first. We talk to him and determine whether he is capable of returning the money. Sometimes, we will conduct checks on his business or house to see if he’s genuine,” Ganesan told The Star. If he has doubts about the client, he gently tells him the funds are unavailable. If he doesn’t, then he’ll issue an IOU and MOU which both parties must sign. [Source: Revathi Murugappan, The Star, July 18, 2009 /~/]

“I’ll send the client a lawyer’s notice if I think he’s trying to cheat. I don’t report it to the police because our style is based on goodwill. If he doesn’t pay, we continue sending legal notices for two years before summoning them to appear in court. If the client files for bankruptcy, then I have to consider it a bad debt. “We don’t threaten anyone because they might counter-threaten us! The Chettiar community likes to protect their families, so we prefer to keep quiet.” /~/

The payback time period can be negotiated, although, generally, the minimum time is a month and the maximum, one year. For regular clients, he might waive the collateral requirement. People usually seek loans because they are in financial distress or want to run small businesses but have no capital. They include stall keepers, fruit sellers, textile shop owners, or those who need funds for medical expenses, weddings or kid’s education. In the past, clients borrowed amounts ranging from RM100 to RM20,000, but now the sum varies between RM1,000 and RM100,000. For huge sums, Ganesan requires clients to show their bank statements but, as a rule, he prefers giving smaller loans. /~/

Unlike their illegal counterparts, the Chettiar moneylenders have no bodyguards, no bill collectors, don’t live in grilled surroundings and rarely have disputes with their clients. Rather, Veeraseelan says, they are well-respected in society. “If we can practise what Chettiars have done previously, maybe we can eliminate the illegal industry. They act purely on good faith and, a lot of the time, they don’t even require a guarantor. Chettiars call it micro-credit but I call it community loan.” /~/

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Malaysia Tourism Promotion Board, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Foreign Policy, Wikipedia, BBC, CNN, and various books, websites and other publications.

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© 2008 Jeffrey Hays

Last updated June 2015

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