It is good to hear our new deputy prime minister (DPM) focusing on economic and financial management. Recently he made two points which I think are pertinent. First, he urged higher saving rates among Malaysians and second, he urged the banking industry to reduce non-performing loan (NPL).

Given the endless rhetoric now prevailing in the country, the talk on economics and finance is like a breath of fresh air the nation badly needs.

It is true we have low savings because we choose to consume more due to a lavish lifestyle. On the other hand, low savings could also be due to low income and high taxes.

In fact, it is not difficult to discern why our saving rates are low when we look at the level of household debts to gross domestic product (GDP) which stood at more than 85 percent, among the highest in the region. How could Malaysians save when increasing portion of their incomes is now used to service debts?

It is easy to urge the people to save more, but savings have much to do with inflation and interest rates besides income level and lifestyle.

I think savers in this country are not given adequate reward for their sacrifice. If interest earned could hardly outpace inflation rates, who really would want to save more?

Banks in Malaysia are colluding to exploit savers by paying them at least 20 to 25 percent less on interests. Bank Negara Malaysia must answer why FD rate on new fund is 4.25 percent but renewed fixed deposit (FD) rate with the same tenure is only 3.1 percent. Why can’t the banks pay interests based on market rates? Why must they make the savers switching their FDs from one bank to another to earn higher rates?

On compulsory savings such as the Employees Provident Fund (EPF) and Lembaga Tabung Haji, again the returns must be reasonable and above long-term inflation rates. There must be serious attempts made to preserve and protect the long-term value of ringgit. Otherwise, forced savings are just another form of ‘national service’ to provide a cheap source of funds to borrowers but at the expense of the savers.

On non-performing loans (NPLs), I think it is better to manage the loan portfolios than trying to reduce the NPLs after they have crept up to unsustainable levels.

It is good for the DPM to highlight the perception that borrowers generally expect government-owned banks like BSN and Bank Rakyat to write off loans.

Well, I guess it is time not just to correct the perception but also to enforce strict lending guidelines when granting loans, especially to those with ‘connections’. Rightly, all banks with cooperation from Bank Negara Malaysia should profile NPL borrowers to avoid repetition of bad borrowers time and again.