Raising financial literacy a dire need for ASEAN

Reading Time: 3 minutes
Arno Maierbrugger
By Arno Maierbrugger

Brunei has started a highly appreciable initiative to raise financial literacy in ASEAN, as agreed upon at the 17th ASEAN Finance Ministers’ Meeting on April 4 in Bandar Seri Begawan, proving the Sultanate’s strong commitment to the bloc while holding its chair in 2013.

The initiative aspires to enhance the ability of the ASEAN population to better manage their finances and ASEAN governments to understand the need for financial education from the very basic foundations – personal and household.

Furthermore, it aims to promote and facilitate the development of young entrepreneurs in the region, keeping in mind the fact that financial literacy is the basic ingredient for business and investment.

In fact, people in ASEAN are in dire need for improved financial literacy to avoid pitfalls of growing wealth and increased consumer spending. There have been a few instances in the region that show that awareness in dealing with financial issues is not at the level as it should be.

One outstanding recent example was the introduction of the so-called first car-buyer scheme in Thailand that had a devastating effect on a sizeable number of people despite its good intentions.

The country’s government introduced the scheme in end-2011 to stimulate car sales by granting generous tax rebates that made new middle-class cars up to 100,000 baht ($3,450) cheaper.

The result was that many were lured into buying a new car they did not really need on a loan they actually couldn’t afford, being burdened with monthly instalments up to 70 per cent of their income. Not only a few buyers didn’t do the math – with the effect for many that the newly bought cars are now left untouched, parking in countless front yards because their owners cannot longer afford the gasoline to put them into operation and are forced to still use their old motorcycles they originally wanted to replace.

Another example: Low-income workers were lured by the Thai government’s ‘affordable housing programme’ to buy property in the northern suburbs of Bangkok around the many assembling factories there at down payments of just 10 per cent of the house value.

They ended up with paying 6,000 baht from their 10,000 baht monthly income as loan instalments to the bank – but then came the floods of November 2011 and inundated the estates that had no proper water outflow canal systems because they were built so ‘affordable’, flooding houses up to two meters and make them uninhabitable.

Apart from losing their shelter, many of these workers also lost their jobs because flooded factories were forced to close down – resulting in countless individual tragedies for entire families.

These and other examples including loan usury by private lenders and small-scale pyramid investment schemes which are common mainly in the poorer nations of ASEAN illustrate the dire need for enlightenment in financial issues and the necessity for proper risk assessment.

The Brunei initiative should be highly appreciated by all member states of the ASEAN bloc and full support should be given to hold target group-oriented seminars and information events on financial planning programmes all over the region.

This comment is part of Inside Investor’s weekly column series in Brunei’s leading newspaper Brunei Times and is published every Monday.

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Reading Time: 3 minutes

By Arno Maierbrugger

Brunei has started a highly appreciable initiative to raise financial literacy in ASEAN, as agreed upon at the 17th ASEAN Finance Ministers’ Meeting on April 4 in Bandar Seri Begawan, proving the Sultanate’s strong commitment to the bloc while holding its chair in 2013.

Reading Time: 3 minutes

Arno Maierbrugger
By Arno Maierbrugger

Brunei has started a highly appreciable initiative to raise financial literacy in ASEAN, as agreed upon at the 17th ASEAN Finance Ministers’ Meeting on April 4 in Bandar Seri Begawan, proving the Sultanate’s strong commitment to the bloc while holding its chair in 2013.

The initiative aspires to enhance the ability of the ASEAN population to better manage their finances and ASEAN governments to understand the need for financial education from the very basic foundations – personal and household.

Furthermore, it aims to promote and facilitate the development of young entrepreneurs in the region, keeping in mind the fact that financial literacy is the basic ingredient for business and investment.

In fact, people in ASEAN are in dire need for improved financial literacy to avoid pitfalls of growing wealth and increased consumer spending. There have been a few instances in the region that show that awareness in dealing with financial issues is not at the level as it should be.

One outstanding recent example was the introduction of the so-called first car-buyer scheme in Thailand that had a devastating effect on a sizeable number of people despite its good intentions.

The country’s government introduced the scheme in end-2011 to stimulate car sales by granting generous tax rebates that made new middle-class cars up to 100,000 baht ($3,450) cheaper.

The result was that many were lured into buying a new car they did not really need on a loan they actually couldn’t afford, being burdened with monthly instalments up to 70 per cent of their income. Not only a few buyers didn’t do the math – with the effect for many that the newly bought cars are now left untouched, parking in countless front yards because their owners cannot longer afford the gasoline to put them into operation and are forced to still use their old motorcycles they originally wanted to replace.

Another example: Low-income workers were lured by the Thai government’s ‘affordable housing programme’ to buy property in the northern suburbs of Bangkok around the many assembling factories there at down payments of just 10 per cent of the house value.

They ended up with paying 6,000 baht from their 10,000 baht monthly income as loan instalments to the bank – but then came the floods of November 2011 and inundated the estates that had no proper water outflow canal systems because they were built so ‘affordable’, flooding houses up to two meters and make them uninhabitable.

Apart from losing their shelter, many of these workers also lost their jobs because flooded factories were forced to close down – resulting in countless individual tragedies for entire families.

These and other examples including loan usury by private lenders and small-scale pyramid investment schemes which are common mainly in the poorer nations of ASEAN illustrate the dire need for enlightenment in financial issues and the necessity for proper risk assessment.

The Brunei initiative should be highly appreciated by all member states of the ASEAN bloc and full support should be given to hold target group-oriented seminars and information events on financial planning programmes all over the region.

This comment is part of Inside Investor’s weekly column series in Brunei’s leading newspaper Brunei Times and is published every Monday.

Brunei Times logo

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