KOPSYA SCHEME TO HELP CIVIL SERVANTS FACING BANKRUPTCY

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INTRODUCTION Angkatan Koperasi Kebangsaan Malaysia Berhad (ANGKASA) and Congress of Unions

of Employees in the Civil Service (CUEPACS) have set up a Koperasi Pembiayaan Syariah Angkasa Berhad (KOPSYA) that also known as Syariah Financing Cooperative scheme to help civil servants with financial problems, especially those declared bankrupt after failing to pay their credit card debts (The Star, September 24, 2011). ANGKASA is the apex cooperative society that protects all types of basic and upper secondary throughout the country. It is recognized by government as a body representing the Malaysia Co-operative Movement at national and international level. ANGKASA do not engaged in business activities such as other cooperatives. Their objective are to consolidate the cooperatives in Malaysia in order to protect and champion the rights and interest of the cooperative movement, representing the cooperative movement at national and international level, implement the cooperative education program and the concepts and principles of cooperatives among Malaysians, and provides affordable services to assist the operation and administration of cooperatives.

CUEPACS is a federal public sector union combination including statutory bodies and Local Authorities. It has been registered under the Trade Unions Act on October 23, 1957 a few months after the country gained independence. Membership of CUEPACS is open to all trade unions registered in the civil service in Peninsular Malaysia, Sabah and Sarawak. CUEPACS actually focus on take a good care of civil servants interest and act as the main reference source matters in accordance with policy leaders and workers experienced leadership. There are some purposes of the CUEPACS establishment which are to protect the interests of trade unions and its members combined, strive to improve working conditions such as recruitment, working time, promotion, discipline, security positions, salaries and retirement benefits union members combined, promote the material welfare, social and educational trade union members in any lawful manner deemed fit by the Convention Congress or Council, trying to help financially or otherwise all or any of its member unions and others.

According to CUEPACS President Datuk Omar Osman (The Star, September 24, 2011), a memorandum of understanding on the scheme between ANGKASA and CUEPACS would be signed next month. Through this scheme, both organizations would take over the debts of civil servants under strict terms. However, they are still fine-tuning the terms for scheme in order to ensure that the government employees wont take advantage from them. Besides providing a soft loans, they also consider to help those who unable to pay personal loans. The good news of having this scheme is that, it did not charge service tax. Datuk Omar also states that KOPSYA scheme is made so that the civil servants can make a loan through salary deduction that can avoid them from declared bankrupt. On the same time, they want to avoid civil servants from borrowing money from illegal channels because it will cause problems (Bernama News September 14, 2011). In addition, he emphasizes that government employees should not use this scheme for unreasonable amount of loan and ask the cooperatives to settle everything for them.

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ANALYSIS

Reasons for Introducing KOPSYA Scheme KOPSYA scheme is created to help civil servants and avoid them from facing bankruptcy. According to CUEPACS President Datuk Omar Osman, both organizations CUEPACS and ANGKASA would take over the debts of civil servants under some strict terms (The Star Online, September 24, 2011). He also stated that as of December last year, there is about 3000 government employees had been declared bankrupt. That is why this scheme is made available to those were being declared bankrupt due to credit card debt. Besides providing a soft loans, they will considered those who unable to pay personal loans. Meanwhile, Domestic Trade, Cooperatives and Consumerism Minister, Datuk Seri Ismail Sabri Yaakob said that, this scheme is needed due to the high number of Malaysians declared bankrupt (The Star Online, September 24th, 2011). In addition, there is a report that an average of 41 Malaysians, including civil servants, were declared bankrupt every day for failing to settle their credit card debts (New Straits Times, September 24, 2011). According to Department of Insolvency Malaysia (MDL), they had restructured 80,348 bankruptcy cases from 2005 to May 2010 as following:

From the list, it is obviously shows that Malay people record a highest rank of bankruptcy case with 31, 950 cases. While Indians record a lowest rank of bankruptcy cases with 7,661 cases.

The second reason of KOPSYA establishment is to avoid civil servants from sued by bank. This new mechanism could help them on making loans by salary deduction as payment. It is also allow those affected to pay the loan by instalments. According to Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob, this scheme is not only help those who were declared bankrupt but also help civil servants before they are declared bankrupt (New Straits Times, September 24, 2011). When people use credit card and fail to make payments, the creditors may take legal actions. Last step that will be taken by bank is that the debtor may be blacklisted by the particular bank and they are not allowed to apply any other bank facilities from the particular bank. There is a report that stated an average of 41 Malaysians including civil servants, were declared bankrupt every day for failing to settle their credit card debts (New Straits Times, September 24, 2011).

Third reason of KOPSYA scheme establishment is to avoiding civil servants from charge service tax. ANGKASA President Prof Datuk Dr Mohd Ali Baharum said KOPSYA did not charge service tax, and it was expected to attract civil servants to make loans at affordable rates (BERNAMA News, September 14, 2011). As stated on The Star (December 3, 2009), RM 50 service tax per credit card was implemented start from January 1, 2011. According to Malaysian Rating Corp Bhd vice-president and head of financial institution ratings Anandakumar Jegarasasingam, when these things happen, most cardholders become prudent and spend within their financial means, and also they are limit their spending by have one or two credit card only (The Star, 2011). According to CUEPACS President Datuk Omar Osman, KOPSYA scheme is managed by ANGKASA to help civil servants in making loans via salary deduction (BERNAMA, September 14, 2011). By doing that, it could avoid them from being declared bankrupt as their main sources payment of loan is done through monthly salary.

Impact of KOPSYA Establishment on Civil Servants The Civil servants could get a permanent job with government organizations if KOPSYA scheme is establish. Usually, organizations will implement many kinds of policies or practices to prevent them from leaving their job. However, through implementation of this scheme it also could do the same thing but in different ways, it relates with their financial aspect. Civil servants could use KOPSYA scheme to make loans through salary deduction (BERNAMA, September 14, 2011). As their main source of loan repayment is their monthly salary, this could prevent government employees from leaving their job. It is beneficial for them as they can work with government that provide a lot of allowances, salary increment every year, and they could pay a less amount of loan (KOPSYA) as compared to pay a credit card debt. As civil servants are making loan of KOPSYA, they have to work with government organizations until they could settle the loan debt. On the same time, by having retention of civil servants it could increase the productivity of work. Besides that, civil servants can make a loan at low interest rates. A personal loan was granted after a credit assessment of the borrower, with the purpose of the facility often being examined by the bank. However, in the case of credit cards, after the card has been issued, the bank has little or no control on how the cardholder uses the credit available to him, said Anandakumar (The Star, December 3, 2009). If this thing happens, people will be lack in managing the outflow of credit card value and make expenses unwisely. If people use a credit card, they will be charge on high interest rates. Most banks in Malaysia offered interest as per Bank Negara Malaysia credit card interest rate structure which last revised in March 2009 (1million-dollar-blog, January 18, 2011). The cardholder will be charge 13.5% interest rate on the 13th month if they pay credit card bills promptly for previous 12 consecutive months. As KOPSYA scheme is for civil servants, their interest rate is low and there is no charge on service tax. Moreover, by having this syariah financing cooperative civil servants could have a lesser debt. They do not need to pay expenses by using a credit card that charge with higher interest rates or borrowing money from illegal channels. President of CUEPACS said, We dont want 1.5 million civil servants to borrow from illegal channels as it will cause problems (BERNAMA, September 14, 2011). They also do not need to pay a high interest rate of credit card that only increases their debt if no payment is made.

Impact of KOPSYA Establishment on ANGKASA Angkatan Koperasi Kebangsaan Malaysia Berhad (ANGKASA) is the one who studying a mechanism to help civil servants that declared bankrupt after failing to pay credit card debts. Their mechanism is using funds from the Kopersi Pembiayaan Syariah Angkasa Berhad (KOPSYA) in order to settle the debts especially among ANGKASA members. The establishment of KOPSYA could give impacts toward ANGKASA organization itself. First, it could train the ANGKASA body to be an efficient in management based on good values and strong sense of belonging. According to minister of Domestic Trade, Cooperatives and Consumers Affairs Dato Sri Ismail Sabri Yaakob, the scheme should be in a professional, honest and trustworthy so that it can contribute to society regardless of race, religion and culture thus comparable to the existing co-operative banks (Wan Adlina, ANGKASA website article, July 1, 2011). Another impact of KOPSYA establishment is to improve the main body, ANGKASA image. Dato Sri Ismail Sabri Yaakob states in his speech at the General Meeting KOPSYA ANGKASA on 22 April 2011, through the establishment of KOPSYA scheme it does not only improve the image of the main body, event the cooperative movement as a whole. This effort deserves support by all cooperatives in KOPSYA ANGKASA. Before this, the movement of cooperative in Malaysia country was contribute to society. Thus, hopefully the establishment of KOPSYA SCHEME will not only make a meaningful contribution to the society and economy, but trying to put ANGKASA in a respected place in near future (Wan Adlina, ANGKASA website article, July 1, 2011). At last but not least, it can prove that confidence among citizens toward establishment of ANGKASA KOPSYA scheme. According to ANGKASA President, Assoc. Dato Dr. Haji Mohd Ali Haji Baharum, the Council of Information and Membership Campaign Towards Establisment Ltd KOPSYA scheme, was implemented across the country was successfully raised a share capital of RM360 million (Wan Adlina, ANGKASA website article, July 1, 2011). This can proving that confidence among citizens, especially ANGKASA members is high. In addition, the main difference between these schemes than other cooperative bank is, it only involved among the cooperative membership only. Therefore, it was a high confidence that the development of this scheme will be faster through cooperative movement which is now thriving in this country.

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CONCLUSION The main conclusion that can be drawn is therefore that syariah financing cooperative

(KOPSYA) will benefits most people including civil servants, ANGKASA, CUEPACS and the Malaysian economy. It is good steps taken by government by providing this scheme. Although they are some difficulties will be face in the early implementation, but it will be better after a longer period of time. By having this, hopefully all Malaysians concern about their financial planning. They could try to avoid from bankruptcy due to credit card debt by managing financial wisely. In the light of these conclusions, I would like to recommend that both ANGKASA and CUEPACS could do some research regarding the syariah financing cooperative by observing, analyzing, interpreting and find a findings in order to provide a better quality of services. It could be in term of flexible loan repayment, the mechanism tools to pay loan by using internet or machine. They could upgrade their services so that people can use it as effective and efficiently. If it was successful, our country can implement this scheme for all individual, public and government employees. In addition, they should tighten up their terms and conditions for make a loan in order to avoid civil servants declared bankruptcy and take for granted towards KOPSYA scheme provider.