BANK Negara should extend the automatic blanket moratorium to borrowers as the country continues to reel from the Covid-19 pandemic, said the Federation of Malaysian Consumers Associations (Fomca).

Fomca president Dr Marimuthu Nadason said extending the automatic blanket moratorium till year-end would be ideal as there is uncertainty surrounding the duration of the currently imposed movement-control order (MCO) and vaccination for the vast majority of the public still a long way to go. 

“Well, the current situation is probably not going to get any better until almost most of the population gets vaccinated, which is expected to be next year. 

“First quarter of next year is still too far away. Are people going to continue suffering till then? 

“So, in such cases, the government must impose a blanket moratorium on bank loans till year-end,” Marimuthu told The Malaysian Insight. 

Malaysia imposed a near-nationwide MCO 2.0 on January 13 as Covid-19 infection rates continue to soar. 

The MCO was supposed to end on February 4 but it was extended a fortnight, until February 18.

Last September, when the moratorium was lifted, Putarjaya instructed banks to approve automatically applications to freeze loan repayments by applicants in the bottom 40% income group (B40) as well as micro enterprises with debts of below RM150,000.

Finance Minister Tengku Zafrul Tengku Abdul Aziz said those in the middle-income group (M40) seeking a reduction in monthly instalments would have to make a self-declaration with the banks, but can do so without documents.

Tengku Zafrul also said those who do not fall under any of the above categories can ask their banks directly about repayment assistance. 

Marimuthu said if the government could impose a moratorium on repayment of loans last year, why was it hesitating now, considering that Malaysia is recording more cases now than last year and when there are no signs of economic recovery. 

“There is still no definite answer when will this MCO end and when people can resume their normal life. 

“So, the government needs to consider the plight of its rakyat and provide the moratorium,” he said, adding that individuals and small and medium enterprises will have more cash at their disposal, which in turn will help to improve the bottom line for all businesses. 

Bank Negara governor Nor Shamsiah Mohd Yunus said recently an automatic moratorium on loans will not be in the best interest of the economy and the people. 

She said it will erode banks’ buffers and make it difficult for individuals and businesses to obtain new loans.

Banks’ soundness and profitability matter for millions of Malaysians who are not only depositors, but also as indirect shareholders through their savings and holdings in institutions like the Employees Provident Fund, Amanah Saham Nasional Bhd, Kumpulan Wang Persaraan, Armed Forces Fund Board and Lembaga Tabung Haji, she said.

A targeted approach is better than an automatic blanket moratorium as it puts the choice in the hands of borrowers and allowing them to make their own financial decisions, she added.

Marimuthu said the governor’s explanation is not justifiable, given that most businesses are severely impacted.  

He cited that tourism and travel is one of the hard-hit industries.

Youth are also facing difficulties securing jobs, hence most are opting to secure jobs in the informal sectors like gig economy or self-employment – which could be of low income and provides less job security.

Marimuthu said if Bank Negara is against extending the loan moratorium, then the government should allow all economic sectors to operate.

Not all the wholesale and retail sectors, which contribute to almost a 25% of GDP are open.

“So, if they don’t intend to extend the moratorium, then they must open up all economic sectors, including pubs, bars, nightclubs, sports centres, massage parlours and others, because they all are severely impacted.” – February 14, 2021.