MP SPEAKS | Rising household debt shows PN's failure on loan moratorium
MP SPEAKS | Malaysia's record-high household debt-to-gross domestic product (GDP) ratio of 93.3 percent as at December 2020 only spotlights the financial pain of the Perikatan Nasional government's deplorable failure to fulfil its promise of automatic extension of bank loan moratorium (except for the top 20 percent income group) for another six months.
Even though Bank Negara Malaysia reported that the high household debt ratio has not yet affected the economy adversely, there is no doubt that businesses and workers are suffering from the current economic recession.
The situation is worse for those facing job retrenchments or business closures, thus impacting negatively on their personal debt situation...
MP SPEAKS | Malaysia's record-high household debt-to-gross domestic product (GDP) ratio of 93.3 percent as at December 2020 only spotlights the financial pain of the Perikatan Nasional government's deplorable failure to fulfil its promise of automatic extension of bank loan moratorium (except for the top 20 percent income group) for another six months.
Even though Bank Negara Malaysia reported that the high household debt ratio has not yet affected the economy adversely, there is no doubt that businesses and workers are suffering from the current economic recession.
The situation is worse for those facing job retrenchments or business closures, thus impacting negatively on their personal debt situation caused by credit cards, housing or car loans.
Even Bank Negara admitted that those earning less than RM5,000 monthly are showing signs of financial stress from their household debt. That is why the automatic extension of the bank loan moratorium is so critical to prevent households earning less than RM5,000 monthly from facing financial distress.
Ironically, Bank Negara said that banks remain resilient against risks from the household sector even under scenarios of assumed higher unemployment and underemployment affecting more household borrowers.
This is not surprising when the profit after tax of the banking sector for 2020 is still a healthy RM21.9 billion compared to RM32.3 billion in 2019.
The cost of the automatic extension of the bank loan moratorium for another six months will not exceed RM6 billion, which can be borne by either the government or shared with the banking sector. Clearly, with the healthy profits earned, the banking sector can afford to do more to help borrowers in financial distress.
Unemployment remains the highest in decades at 4.9 percent in January 2021. More concerning is youth unemployment from 15-24 year-olds has surged to 13.5 percent.
Bank Negara also said that more than 75 percent of Malaysians find difficulty saving RM1,000 for emergency needs, with the economic uncertainties and high cost of living.
The time has come to put the lives of ordinary Malaysians first ahead of the PN government's own political survival.
In the fragmented and fractured PN government which has lost its parliamentary majority, PN can find unity even with the opposition by agreeing to the bank loan moratorium for another six months.
LIM GUAN ENG is Bagan MP, former finance minister, and former Penang chief minister.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.
Report this comment
Are you sure you want to delete this comment?
This action cannot be undone.