PUTRAJAYA should again extend the bank loan moratorium and interest rate waiver to individuals and business communities for another six months to counter declining growth prospects for this year, Lim Guan Eng said. 

With the World Bank last week lowering Malaysia’s GDP growth forecast and economic implications brought by the Russia-Ukraine war, the DAP chairman said these would undoubtedly affect the ability of individuals and businesses to service loans. 

“These economic implications revolve around lower employment prospects with better pay and higher cost of living. The higher cost of living extends to the rising cost of input materials for businesses and has imposed intolerable pressure on their cash position that will only be exacerbated from the shortages and disruption in supply with the continued war in Ukraine. 

“For this reason, the government should heed the requests from individuals and the business community for an extension of the interest rate waiver and bank loan moratorium that ended on March 31, 2022,” the Bagan MP said. 

Last week, it was reported that the World Bank lowered its Malaysia GDP growth forecast for 2022 to 5.5%, down from 5.8% previously.

World Bank senior country economist Shakira Teh Sharifuddin said the downward revision was largely caused by the unfolding developments surrounding the Ukraine crisis.

Lim, a former finance minister, said industries, especially small and medium enterprises (SMEs) are still struggling to recover after the failed economic policies implemented and disastrous serial total lockdowns imposed in the last two years.

He added that the banking industry can afford to provide relief to borrowers considering that it made hefty pre-tax profits even during the Covid-19 pandemic.

“Despite bearing the costs of the loan moratorium during the first series of total lockdowns that cost RM6.4 billion in 2020, the banking industry still recorded healthy pre-tax profits of RM28.5 billion. 

“For 2021, not only was there a six-month loan moratorium costing RM6.4 billion coupled with an interest rate waiver for the poorest 50% of the population that cost banks more than RM1 billion, the pre-tax profits of the banking industry still increased to RM33.7 billion,” he said.

“Clearly, bearing the costs of the loan moratorium and the interest cost waiver has not affected the profitability of banks. However, much-needed assistance and relief from the loan moratorium and interest rate waiver will help individuals and businesses, especially SMEs, allowing them to recover from Covid-19 and overcome the current economic recession.” – April 12, 2022.