A Nation of Bad Debtors?

Are we really that bad at paying our debts?

Ali (not his real name) is pacing up and down his small office. He’s facing a financial crisis, not because his business isn’t brimming. By all accounts, he should be making a fair amount of money from his construction projects, but not a cent has gone into his bank accounts and late payments for projects he has completed is squeezing his cash flow. ‘If this continues, I won’t be able to pay my suppliers. Some of the outstanding payments due to me is way past the 60 days credit period, and as a result I have had to extend my own repayments to suppliers’, Ali confides. Meanwhile, Ahmad (again, of course, not his real name), one of many end customers of construction projects, in this case, a renovation project for his parent’s home, is proudly announcing to his friends that he hasn’t bothered approaching the contractor to pay for the window frames put up on his house. 'They (the contractors) have called me once or twice asking for the payments but I was busy then so I couldn’t meet up. Since then they have stopped calling, so why hassle myself to pay. Maybe when they chase again…' Ahmad confides.

It seems, we Bruneians can be rather bad debtors. In a March 13^th 2008 report by The Brunei Times (here), Pehin Orang Kaya Laila Setia Dato Seri Setia Hj Abdul Rahman Hj Ibrahim, the Second Minister of Finance, announced that collectively, we Bruneians owe the government a staggering $226 million in unpaid utility bills, $106 million from unpaid electricity bills and $44 from water (the remaining $78 million was not alluded so it would be great if MOF could tell us where the rest of that $78 million we Bruneians owe is). Yes, folks, that’s $226 million. And just to drive home the point how much $226 million is at the national level (because at the personal level we KNOW how much $226 million is!), let’s look at how this money can be used to fund our national development. Based on the national budget that was presented in the recently concluded Legislative Council meeting, $226 million is sufficient to run:

1. The Prime Ministers Office ($49.8 million – approximated figures), the lead government agency in the country.
2. Narcotics Bureau Department ($9.6 million)
3. Anti-Corruption Bureau ($7.1 million)
4. Royal Brunei Police Force ($121.8 million)
5. Law Section ($0.8 million)
6. Attorney General ($10.1 million)
7. State Judiciary Department ($8 million)
8. Labour Department ($5.9 million)
9. Royal Customs and Excise Department ($13.5 million)

Source: Here

Total the figures up and you’ll get about $226.6 million. Yes, we think perhaps it's time for all of us responsible Bruneians to wake up and smell the roses (although we doubt this bad debtor situation will smell as pleasant) – we owe the government enough money to run 9 government agencies, 8 of which, as you may have noticed, are agencies linked to some form of law enforcement (Prisons Department cost $14 million, which is not included above but we’ll tap that from the amount owed by Bruneians who prefer not to pay for their mortgages – see here). Note: there's no particular reason why I focused on the law enforcement agencies in particular, but simply to make a statement that the amount we owe is enough to cover one aspect of our country's government.

Yet despite all the rhetoric from government agencies, pleading the good will of the people to pay, citing hospitals and schools that can be built with that money, has the calls of our leaders, both government and religious been heeded? Or has it fallen on deaf ears, losing out to the thunderous inner self centeredness to hold out on paying as long as we can? We do acknowledge that there are fellow citizens out there who may be living under the poverty line and therefore cannot afford to repay and in fact need help through Zakat funds for their daily commitments. But there is also a proportion who end up in financial difficulty out of financial naivety, and if that is the case, shirking their financial responsibility when religious leaders have alluded to us this simple advice is simply not acceptable. And if you thought that being bad debtors is a behaviour restricted to individual citizens of Brunei, then you would have thought wrong. Even government agencies owe money and find it difficult to repay that debt, going past the 30 days credit period normally afforded by suppliers and their contractors.

Some of you may ask, what about using legal avenues to recoup the bad debts? Well, of course that is an avenue to explore, but legal avenues are costly, time consuming and doesn't guarantee Ali we spoke about earlier any financial compensation - the debtor can file for bankruptcy, or choose to pay $50 a month on, say a $10,000 debt (yes I've seen it happen) because that's all he can afford, a situation that hardly helps the cash flow problem facing Ali. And there is no legal recourse if your debtor is the government itself because as far as we know from our rudimentary knowledge of Bruneian law you can't sue the government. And let us also not forget the incidences where debtors actually shout and scream at the business owners for trying to collect debts!

So, after all that's said and done, we feel that it is our moral obligation to ask a rather soul searching question for us Bruneians:

Are we, as a nation, seriously a bunch of bad debtors? What perpetuates our behaviour to the extent that almost a quarter of a billion dollars is owed in utility bills? More worryingly what perpetuates this behaviour to be seen at government level as well?

The problem exists and we have acknowledged it, so now what can we do to solve this problem? If pleading to good will and a sense of personal responsibility does not work, is it time for government agencies to crack the whips and show a, shall we say a more direct approach at collecting debt (we're not suggesting the Dominic Mick Gatto style of debt collection so don't worry)? We've already noticed a few years ago when the Department of Electrical Services cut the power to hundreds of businesses for failure to pay their bills on time, and we saw how quickly they ran to pay them off - a tactic that is know being explored for households as well, recently brought up at the LegCo (here). I guess, sometimes, even as adults, a little smack on the 'bottom' (or wrist if you prefer), might get the intended results - (note: the humanitarian side of us also suggests that the relevant government agencies identify true cases of the needy who really cannot afford to pay to be provided some form of financial assistance).

At the end of the day though, we must all acknowledge this is a problem that must be solved, sooner rather than later, either by gentle coaxing or a more direct KITA (Kick in the A) approach. And it should be time that the relevant policymakers decide which is the best way to address this issue and set a plan out to solve it once and for all, taking into account social and economic repercussions (to a large extent, political too). But whatever is decided and eventually done (and we stress that it should be done soon) we hope the bills are paid up to the government, and Bruneians develop a better sense of financial responsibility (we can hope, but we're also pretty sure a few bad consequences dished to bad debtors will work wonders too). Ali, and many like him, will continue to pace up and down his office, worrying about his business cash flow, if this situation continues as it is. The last thing we want is the bad debtor syndrome become a disease to our entrepreneurship drive, claiming more legitimate and honest businesses, who are striving to survive in Brunei's already challenging economic conditions.

And let us not forget too that Ahmad's contractor will be calling about that outstanding bill soon ....