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Not many people have the opportunity that I had. To serve others, especially those who need help the most, is truly satisfying. 
- Ma Wei Cheng

20120103 Photo Of Ma Wei ChengFor the past 54 years, the AUPE Credit Co-operative has not only saved many public service employees from financial embarrassment, the Co-op, set up by Amalgamated Union of Public Employees, has saved them from losing their jobs.


“There were very limited borrowing options available to government workers then. Bank loans, secured loans would require a collateral. The average worker was unable to provide that. He could borrow from friends or relatives, but when disputes occur, his friend or family member could lodge a complaint with the government, the employer. He, as the employee, could then face disciplinary proceedings which could lead to dismissal. There had to be another option,” said Mr Ma Wei Cheng, the former Chairman of AUPE Credit Co-operative. He is currently a member of the Central Co-operative Fund Committee (CCFC).


The co-operative was set up to provide that option - a solution which stands in the gap. “There are strict disciplinary rules at the workplace. If the employee borrows more than three times his salary, he would fall into financial embarrassment. This rule, however, does not apply to our co-operative loans,” he explained.


“Another rule specifies that an employee who defaults repayment three times and his outstanding loan is more than three times his salary making him/her fall into financial embarrassment is liable to face disciplinary proceeding which could lead to dismissal. She may be a good worker, with a good track record, but she can be dismissed on the basis of her inability to repay her loan.”

Mr Ma recalled how a Human Resource Director alerted the Co-operative about an employee who was on the brink of losing her job for this reason. The employee ran into some family problems and struggled with bank loan repayment. “AUPE Credit Co-operative stepped in to help her tide through a crisis, averting a default and dismissal. The HR Director was happy that he could keep the good employee.”

The co-operative is judicious not just in evaluating loan requests. Its message about timeliness in servicing the loan is not lost on members. “In certain cases, we don’t give the money to the borrower. We issue the cheque directly to the creditor instead,” Mr Ma said candidly.

In this respect, registered credit co-operatives have the support from the government. A clause in the Employment Act enacted in 1968 authorises the employer to deduct from an employee’s salary the amount of loan instalment payable, and pay it to the credit co-operative concerned. “This is the “check-off” feature. However, it is not uniformly practised,” lamented Mr Ma. “For those employers who do not do so, we could notify the Registrar of Co-operative Societies to nudge them into doing so.”

Mr Ma’s involvement in the AUPE Credit Co-operative has its roots in trade unionism and representing the public service workers. His interest in industrial relations dated back to his days at the Telecom, when he was in his 20s and his voice could be heard surfacing concerns of the day to the Management. When the opportunity to attend courses offered by AUPE came knocking, he seized it. This proved to be a fortuitous move. He got acquainted with Mr G Kandasamy, the founder of AUPE, who was also the course trainer. Mr Ma found a mentor in Mr Kandasamy and in 1974, on the latter’s invitation, joined the AUPE full time. There was no turning back since, and no changing of course.

Today, the AUPE Credit Co-operative grants, on average, $18 million of loans a year, making it one of the largest union-based co-operatives in Singapore. Asked about his working formula. Mr Ma represented it thus: “Doing well, doing good and preserving unity among members.”

“To achieve the first two objectives, we need good corporate governance. Doing well contributes to sustainability of the co-operative; it enables us to keep going, and for a longer period of time, and in perpetuity if possible. Doing good helps us to stay relevant to our members’ needs. Lastly, like the union, unity of members is pivotal to our continued ability to pool and mobilise resources,” he clarified.

A look at the dashboard suggests that the team running the co-operative had got all three right. The co-operative is doing good for a larger population segment with membership now open to non-public employees too. The number of members had increased from 65 in 1965 to 17,000 in 2018. In 2018, the amount of loans granted totalled some $18 million, compared to $100,000 in 1966. Members’ subscriptions and savings grew steadily from $4,000 in 1965 to $150 million in 2018, a testament to the trust and confidence members have for the co-operative.

“We have had retirees who want to continue to save with us. Some even want to commit their pensions to us,” Mr Ma recounted.

The co-operative is not about to rest on its laurels. “Doing well is a continuous journey. We seek out opportunities to improve, to become more efficient in what we do. We observe what’s happening in the financial sector and ask ourselves what new services we can offer to members. Which part of our current work process can benefit from the use of technology, to reduce transaction time, without compromising on security?”

While the financial position of the co-operative is in a healthy state, it has its share of challenges. Where can the extra cash be invested? As a co-operative, it comes under the regulatory purview of the Registry of Co-operative Societies, Ministry of Community, Culture and Youth (MCCY) which imposes limits to the types of investments that can be made. So, the art is in finding the ‘right’ combination of Unrestricted Investments and Restricted Investments to optimise returns.

As regards succession, the co-operative looks to the AUPE for identification of suitable candidates to take over the mantle. “Therein lies the advantage of being a union-based co-operative. There is a larger pool - members and staff - from where we can identify candidates. We need leaders with steady hands, who can be trusted to manage the money that is entrusted to us by members. Above all, they must have empathy,” said Mr Ma.

 

Ma Wei Cheng on
Setting Up a Co-operative

Tips on setting up a co-operative:

  • Crystallising the business model - do not rush into coming up with one. Take time to conceptualise it. Flesh out ideas in writing so that these can be shared with relevant parties, and refined over time.
  • Teaming up right - identify and select the right people coming on board. Possessing a certain level of empathy is paramount.
  • Staying the course - the co-operative framework is sustainable if it has steady hands on the right levers to run it well.


Mr Ma retires in March 2019 and will serve as an adjunct trainer at the Ong Teng Cheong Labour Leadership Institute.

 

Learning Tips

  • Have empathy. Understand their circumstances, and help them to get out of indebtedness.
  • Sustainability and good governance are important.
  • Leverage technology to make operations more efficient and more convenient.

 


 

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