OutSyed The Box |
| More "Us Versus Them" : International 'Bisnes' Posted: 14 Apr 2012 01:57 AM PDT Just a little bit more about the "us versus them" attitude that is prevalent among too many religious people including the Muslims. Just last week I attended another seminar on Islamic management training by someone who runs a management school in Madinah in Saudi Arabia. His management school was just over a year old and he was making comparisons between his school, Harvard, Oxford and INSEAD. Boleh tahan juga. More on this maybe another day.
Closer to earth, the Islamic scholars who are at the cutting edge of Islamic finance are still grappling with the elusive method of pricing their Islamic financing products. The conventional banks use interest rates to price their products - easy, efficient and in my view (as well as the views of other Muslims like Thantawi the Rector of Al Azhar University in Cairo) it is not riba. In the Quran, riba does not mean bank interest.
The conventional bank makes life easy - say they charge you 2% below BLR for a loan. Interest is calculated based on the amount of time lapsed. Hence the all important 'time value of money' and 'time shall be of the essence' in almost all contracts.
However the Islamic financiers want to re-invent the wheel. It is the "us versus them" syndrome again - we have to be different from the rest of the thinking world. The Islamic financiers do not say things like 'time value of money' or 'time shall be of the essence'. These are strange ideas to them. Time is of no value or of less value to them.
But the huge question still remains 'How do the Islamic financiers price their financing products?'
Before we go any further, is this question really relevant? Yes it is. Because any product must have a price. How much will it cost the consumer to borrow from the Islamic bank versus the cost of borrowing from the conventional bank? Inquiring minds should want to know.
Among the conventional banks this question has been answered for over 2000 years. Here is a rough rule of thumb method. Say a region of the country has hundreds of thousands of acres of cabbage fields. Almost everyone is a cabbage farmer. Say that with the weather, the rain and sunshine, the terrain etc that is unique to that area or that part of the world, the net yield per acre of cabbage is 10% (meaning after you PAY the workers salaries, after PAYING for fertiliser, PAYING taxes etc there is a 10% Net Profit). So this is the average economic yield for that area. No need for rocket science. Everyone can figure this out.
So in this economy, everyone including the cabbage farmer, the banker, the Islamic financier has only this 10% average economic yield to work with. We cannot run away from this.
Using the conventional banking system, after time, a "market interest rate" or "stable interest rate" will establish itself - which should (FIRST AND FOREMOST) give a decent return to the cabbage farmer working within his 10% economic yield farm economy. Only after that should there be a leftover to pay back the bank loan.
It has to be one for you, one for me. It cannot be 'satu untuk kau, dua untuk aku'.
If the banks are unfair, then they will have choked the cabbage farmers to death. The cabbage industry would have disappeared and there would be no more banks as well. The banks would have killed off their customers - the goose that lays their golden egg. This is what the Ah Long's do - they charge 10% a month (or more). Other Ah Longs like the Credit Cards charge 18% a year. The Grameen Bank in Bangladesh also charges about 18% per annum. They won a Nobel Prize for helping the poor.
However, all said and done, the fact that conventional bankers are still around and they are still flourishing (including the Grameen Bank of Bangladesh) is proof enough that the golden egg layers (the Bank's customers ie the cabbage farmers) are also flourishing.
Without banks, we could be reduced to stone age barter trading. Try delivering a Proton Pray-weh in exchange for cabbages.
Now, in walks the Islamic financier. He says, 'Habibi, its us versus them. Islam versus kuffar. Islam versus oppression. Islamic banks versus riba'.
So we ask him, 'Ya habibi the conventional bank charges me 6% for the loan. How are you going to charge me for your Islamic financing? I grow cabbages. My economic yield per acre of cabbages is about 10%. We are cabbage farmers. This soil is good for cabbages. Thats all we can produce in this part of the world'.
So what shall be the answer from the Islamic financiers? I really don't know. Do the Islamic financiers know any better? I am afraid not.
I also met a young man at the same seminar. A Muslim boy from China who is doing a PhD. Guess what is his area of research? 'Pricing of Islamic financing products'. Folks, it is still a mystery to the Islamic financiers. How shall we price Islamic financing products? (Only now the young man is doing his PhD research).
When they did international loan syndications, the Islamic banks used to sign a separate (secret) loan agreement. It was called the rate setting document. Also known as the 'price setting document. The rate setting document would say that the pricing of the Islamic financing would be based on the LIBOR or London Interbank Offered Rate. They had to do this because there cannot be a separate Islamic pricing mechanism for lending money which overlooks the fact that in a cabbage growing economy, or a manufacturing economy or a tourist economy, the return on someone's honest economic efforts could be around 10% per annum. Whether Islamic or conventional, we all have to start from square one.
(Now, for all you Islamic banking suicide bombers out there, when you start sending in your comments please do a few things. 1. Do not be rude or start calling me names ok. 2. If your comments exceed 50 words, you are already confused. Just stop. Thank you.)
I recently had a conversation with a friend who started talking about the "Islamic economic model" which he said was the last thing that Dr Mahathir did not do before he retired. Frankly I do not know what is an "Islamic economic model". Will a cabbage farm yield more than 10% return per acre in an Islamic economic system?
In the oil palm industry in Malaysia, IOI Plantation's yield of FFB is 27 metric tonnes per mature hectare. Sime Darby does 23 tonnes. So who is more Islamic? So who should be the benchmark for the Islamic financiers? IOI (owned by kafirs) or Sime Darby? So what is an Islamic economic model?
Once I heard someone saying 'if the Islamic countries can network among ourselves we do not need to trade with the non Muslim countries'. My question is 'Why?' Why this extreme paranoia about non Muslim countries? If there is any logic to that statement, then using the same logic, the Japanese should not be selling Toyotas to us. They should only sell Toyotas to the Buddhist, Shinto and Samurai countries. If they did that, can Toyota be the No.1 car manufacturer in the world today?
I think the Muslims are getting too carried way by this "us versus them" attitude. It is not solving any of their problems either. Sad to say this type of illogical attitudes will take them further away from getting out of the Club of Doom. They are doomed.
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| Meatworks OK, Meet-works Not So Ok Posted: 13 Apr 2012 11:25 PM PDT  Last Thursday the family had dinner at Meatworks in Solaris (the lembu condo outfit). After hearing so much about the steak place we decided to check it out. Overall rating : Ok. We enjoyed the meal. At 400 gms the T Bone was a whopper. Grilled to 'Medium' it was nice and juicy. The BBQ Beef ribs were good - slightly dry though. The prices were none too bad, compared to say Chilis or Tony Romas. (However Tony Romas beef ribs are really good.) There are danger signs though. Yes it was a weekday but the place was quite deserted. We called and made reservations for 7:45. Traffic was jammed with four of us converging from three different directions around the city. So we changed the time to 8:15. No problem they said. When we got there, we could see why - only two other tables were occupied. The service was good - to an extent. The Filipino boys who wait on customers were all over the place. They speak super fast and have these huge smiles and a cheerful attitude. The Bangla (or Indian) Valet was superb. When we finished dinner, he gave us directions to what else was available around Solaris and told us he would be there till 1 am! But we had our own "local" guide (my son) and we also went home soon after. I think they were actually overstaffed. There were also a couple of our local boys there - senyum pun tak ada, the typical "macam tak nak layan" attitude. I smiled at one fellow and said hi. The guy did not even say hi or return the smile. (Maybe he knew who I was!!). Meet-works skills were poor. I say kekawan, macam mana nak jadi succesful dalam bisnes kalau tak nak layan customer? Atau layan customer ikut bulu dan waktu? Kalau ikut rasmi bisnes, tak boleh macam tu lah bro. In our business, our girls are told, trained and then monitored to make sure they smile and are nice and polite to all customers - Banglas, Africans, Mat Sallehs, China, Jepun, India, Melayu, Arab or whatever. The reason is simple : it is called customer service. You must serve ALL your customers EQUALLY well. I hope Meatworks will do well. Lets show the world lah that you also can do this right - without the RM250 million bottomless pit as backup. You get rich AFTER MAKING good effort and AFTER delivering a good product. Not before. You have to go through the mill as well, just like all other people. Mana ada skim cepat kaya. There is no such thing. Pay attention to the meat, the taste, the prices and most important of all pay attention to your customer service. Boleh jadi lagi kaya.   |
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