By Jerry Choong
SHAH ALAM, July 14 — The Federal government must take the necessary steps to handle the country’s household debt, as an estimated 32,000 Malaysians face bankruptcy if the interest rate further increases in the coming two years, said Opposition leader Datuk Seri Anwar Ibrahim.
He said instead of seeking bailouts for failed conglomerates, the government should instead prioritise the needs of the people.
“The Prime Minister must monitor the bankruptcy situation and ensure that Malaysian families are given support during this period of high inflation to survive and to avoid the long-lasting consequences of bankruptcy,” Anwar said in a Facebook post.
The PKR president cited statistics from the Malaysian Association of Borrowers and Consumers Solution released earlier this week, which stated these 32,000 individuals risk bankruptcy as increasing interest rates over the next 24 months makes it 70 per cent higher.
“These bankruptcies would cause immense hardship to thousands of families and impede our economic recovery. Household debt has been rising since 2008 and at a higher rate than the expansion of our economy.
“From 2010 until 2021, the household debt increased from US$192 billion to US$329 billion (RM853.2 billion to RM1.46 trillion) The ratio of household debt to Gross Domestic Product increased from 75 per cent to over 90 per cent during that time,” he said.
Noting that Malaysia’s household debt is the highest in Southeast Asia and the second highest in Asia, Anwar said the banking sector has been profitable during the pandemic and stands to benefit from the interest rate hikes.
“I call on the government to facilitate assistance or loan moratoriums for disadvantaged families facing increased payments due to the rate increases. The banks can afford to make this concession.
“Although our economy has grown, many Malaysians feel poorer and more indebted than ever before. The rising cost of living places tremendous strain on families to cover basic monthly expenses including food and housing as well as repay loans, as inflation is expected to increase this year,” he said.
On July 6, Bank Negara Malaysia (BNM) increased the Overnight Policy Rate (OPR) by 25 basis points to 2.25 per cent during its fourth Monetary Policy Committee (MPC) meeting this year.
In a statement, BNM said the ceiling and floor rates of the OPR’s corridor are correspondingly increased to 2.50 per cent and 2.00 per cent, respectively.
On that same day, Maybank announced it will revise upwards its Base Rate (BR) and Base Lending Rate (BLR) by 25 basis points, effective July 8.
On July 7, Public Bank, CIMB, and Alliance Bank also followed suit in revising their BR and BLR.