PUTRAJAYA: The government is considering introducing an "enhanced" targeted loan repayment moratorium under the 2021 Budget to help the rakyat cope with the Covid-19 pandemic.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said a more targeted assistance would be the way forward compared with an automatic blanket moratorium.
On March 25, Prime Minister Tan Sri Muhyiddin Yassin announced the postponement of loan repayments, the restructuring of credit card balances and business loans for six months following the Covid-19 pandemic. It ended on Sept 30 and was replaced with targeted repayment assistance until Dec 30 although some banks are extending it till June next year.
Under the targeted approach, only those who have lost their jobs and whose income have been affected are eligible for such assistance.
Tengku Zafrul said the government realised that not all needed the automatic moratorium.
"Based on the survey that we conducted with Merdeka Centre, which ended on Oct 30, 70 per cent of respondents said they do not need the moratorium.
"So we are focusing on those who really need this assistance, especially those who have lost their jobs or whose wages have been affected. It does not matter if these people come from the B40, M40 or T20 group," he said in an interview with the New Straits Times on Monday.
"To do an automatic moratorium for all, I think it is not right. It has to be targeted. With more targeted measures, I want to widen the scope, if that is possible. That is the plan. We will discuss with the banks. We have to wait for the budget."
Tengku Zafrul said based on Bank Negara Malaysia's data, 640,000 Malaysians had applied for repayment deferment for loans and financing up to Oct 9 this year. This equals to an approval rate of 98 per cent.
On reports that banks were making profits despite the six-month blanket moratorium, he said they need a strong cashflow to lend more to the people in need.
He said while the hit on non-performing loans (NPL) was not big at the moment, banks were just postponing the problem and it was not a long-term solution.
"Some people are forecasting that by the end of the moratorium, banks' NPL will increase by up to four times. Let's say the 640,000 people who applied for assistance, these will contribute to the NPL. And this then will affect the banks' profitability.
"That is why you still see banks making profits because they are just postponing the problem. What you don't see is the cash flow. When there is a disruption in the banks' cash flow, how are they going to lend to companies that need financing? This is another angle that we have to look at."
On the call to allow Employees Provident Fund contributors to withdraw from Account 1, Tengku Zafrul said as a responsible government, it was weighing all options,
"We have to make sure that the people who make the withdrawal from Account 1 really need it. We are talking about their savings that are going to save them now and in the future. We cannot implement short-term solutions for everything. But we are listening."
On Nov 1, the National Association of Skilled Workers joined the growing calls for the government to allow EPF contributors to withdraw their savings from Account 1.
Its secretary-general, Mohammad Rizan Hassan, said the proposal would ease the burden of skilled workers in the manufacturing sector who were among the numerous groups affected by the impact of the pandemic.
"Although the government has strong and valid reasons not to allow such withdrawals, the association would like to highlight that skilled workers in the manufacturing sector are severely affected by the present situation due to the drop in overtime work, which has been their supplementary source of income.
"Compounding the situation is the fact that many among the semi-skilled workforce became unemployed when the pandemic forced factories to wind up or downsize operations."