THE call to extend the loan moratorium has gone out again from those in the low- and middle-income groups in light of the softening economy caused by the Covid-19 pandemic.

With the movement-control order (MCO) extended in four states, many whom The Malaysian Insight spoke to said the moratorium will provide financial relief in a worsening economic situation.

Shree, who works as a clerk in Kuala Lumpur, said she has been struggling to repay loans since her husband lost his job abroad.

He was an engineer attached to an airline in Dubai but was retrenched last September due to the pandemic.

As the sole breadwinner in the family now, she said her income is insufficient to cover all household expenses.

With her husband yet to find a job since his return, Shree, 50, said a minimum six-month moratorium will help her stabilise financially.

“I’m the only one with an income in the family now and with my present situation, it would be helpful if the government extends the blanket automatic moratorium.

“My savings are gone, and we’re using the compensation given to my husband but that will not last long,” said Shree, who only gave her first name.

Shree has called the bank to ask for an extension of the moratorium but she was instead offered a loan restructuring plan.

Even with the restructuring that reduces the monthly loan commitment, she said she would not be able to sustain financially.

“I was given a loan reduction up to six months but even then, I don’t think I will be able to sustain.

“Since I have two cars, I wish to sell one but I’m not able to recoup the amount as it’s only the second year I’m servicing the loan and I have to pay additional to settle the loan.”

The government last year approved a blanket loan repayment moratorium from April to September 2020. Finance Minister Tengku Zafrul Tengku Abdul Aziz had said then that Malaysia was the first country in the world to offer such a relief.

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

Tengku Zafrul 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. Others could ask their banks directly about repayment assistance.

Mohammad, from Petaling Jaya, said the lockdown imposed in January halted business and he has had no income to cover monthly expenses.

The 30-year-old in the car rental business said the grants given by the government are not of much assistance but said a loan moratorium will help.

“I’m not in a big-scale car rental business but I was managing well when travel was allowed.

“Now with the lockdown, I have no income as there is no reason for people to rent.

“I still have to pay loans for my house and four cars that I use for business. I sought help from my in-laws for the past months but am not sure how long I can depend on them,” said the father of two.

Mohammad, who ventured into business after leaving college, has never had a professional job.

He has no Employees’ Provident Fund (EPF) savings to withdraw from as allowed by the government.

Mohammad said banks should consider providing a loan moratorium because it is a deferment and not an exemption, adding that banks must understand the plight of the people, who are their customers.

“In such critical times, the banks must understand that not all businesses excel. There are people struggling to put food on their table.

“All we are asking is a loan deferment, not loan exemption,” he said.

The current MCO is the country’s second after the first round from mid-March to May last year.

It was originally imposed from January 14 to 26, and was extended until February 4 as daily Covid-19 infections climbed to the 3,000s and 4,000s, hitting in excess of 5,000 in late January.

It was again extended until February 18 in all states except Sarawak.

On February 19, Putrajaya decided to extend the MCO again but only in Selangor, Johor, Kuala Lumpur and Penang until March 4.

Kedah, Perak, Negri Sembilan, Malacca, Pahang, Terengganu, Kelantan, Putrajaya, Labuan and Sabah, were placed under the conditional MCO (CMCO), while Perlis, which continued to report low numbers of Covid-19 cases, will be the only state to be placed under the recovery MCO (RMCO).

Apart from ordinary Malaysians, several opposition members of parliament and consumer associations had also asked banks to extend the loan moratorium.

Last month, 25 opposition MPs urged the government to implement another six months of the automatic loan moratorium to help businesses and individuals mitigate the economic impact of the pandemic.

The Federation of Malaysian Consumers’ Associations (Fomca) also asked Bank Negara to extend the moratorium until year-end.

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.

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

Mohd Shahrul, 42, from Negri Sembilan was asked to take a 20% pay cut.

Shahrul, who commutes to Kuala Lumpur for work daily, said the salary cut is huge for him as it affects his monthly commitments.

Unsure when the economy will recover, Sharul said a loan moratorium will be a timely boost for him and others.

“I’m sure there are more people like me who are probably on a pay cut and we are not sure how long we will have to endure this.

“Many are in dire straits and probably finishing their savings to sustain through these difficult times.

“The government can actually come to our aid by extending the moratorium, at least for another six months.”

Sharul said the arrival of vaccines will certainly boost the confidence of the people and economy but he said that it will take time for order to be restored.

“Not everyone is going to be vaccinated at one go. It will take time.

“The government must consider all this and extend the automatic moratorium, at least for those in the B40 and M40 groups,” he said.

In Malaysia, the vast majority of workers are in the B40 and M40 category. – February 24, 2021.