THE government, through the banking sector, has the capacity and capability to dish out the three-month extension in moratorium based on the fact banks are projected to enjoy an after tax profit of RM32 billion in 2019, while the extension in the moratorium will cost only RM6.4 billion.
Compared to the borrowers whose incomes are permanently lost, it is still fortunate for banks to be able to make up for the "loss" when times get better. Public requests for the government to extend the loan moratorium for individual and Small and medium enterprise (SME) borrowers appear to have not tapered off as people and businesses are still trying to recover from the unprecedented economic and health crises.
The introduction of moratorium in April to September has indeed helped the rakyat to have access to immediate cash and provide the opportunity for them to contribute to a rising consumption expenditure that is needed to uplift the economy, as consumption is one powerful engine of growth to rev up the economy, especially during an unprecedented economic downturn, like the one we are facing now.
There is a need for empathy to weather this difficult time. The ground reality of the livelihoods might not be as rosy as reflected by some of the actual economic data.
The Malaysian Reserve recently reported that over 51,000 retail stores will be closed down across the country within the next four to five months on the back of the changing retail landscape. This will then contribute to future unemployment figures. Tourism industry is also not spared as a series of cost-cutting measures have been pursued by the companies in the industry.
Although the latest data shows the number of unemployed went down by 3,500 in August, there remains 741,600 who are still unemployed, and this is in August alone.
With the re-imposition of the Conditional Movement Control Orrder (CMCO) in Sabah, Selangor, Kuala Lumpur and Putrajaya due to rising Covid-19 infections, the economic situation will possibly worsen.
Businesses, especially the SMEs, which represent 98.5 per cent of business establishments in the country are still experiencing a challenging situation as they are in need of more support in order to survive.
According to the Malaysian Employers Federation, as much as the employers are appreciative of the government for supporting them through the crisis, many face difficulties to remain afloat as many companies' requests to obtain repayment assistance from the banks have been rejected or postponed.
Additionally, a survey conducted by the SME Association in August revealed that 20 per cent of total respondents were considering permanent closures in the next six months. In terms of cash flow, 22 per cent have enough cash flow to sustain only for a month, 27 per cent until November and 31 per cent until December.
It can be observed that financial anxiety has become more evident after the first round of loan moratorium ended and unfortunately, Covid-19 cases have also been on the rise, and the appearance of vaccines on the scene remains elusive.
Until a significant portion of the population has been vaccinated, balancing lives with livelihoods through shifting levels of the MCO is expected to be followed by the corresponding 'new normal' of seasonal spikes and infection waves, as is happening now.
Even when Malaysia has successfully secured a safe and proven vaccine supply, the massive logistical requirements for packaging, storage and the cold-chain logistics for a nationwide vaccination programme carry with it risks of operational and supply-chain hiccups.
In July, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz had highlighted that the banking sector would face a total loss of RM6.4 billion between April and September with an estimated loss of RM1.06 billion per month during the moratorium period. But these losses can still be recovered when livelihoods become better, as borrowers would eventually have to repay their loans later. This is on the back of officials' and analysts' expectations that the economy will begin to recover next year.
So now is the time to think about not so much what the rakyat want but what they need. By addressing this, the government will be seen as moving from being sensitive (prihatin) to the needs of the rakyat to the next level — empathy for the needs of the rakyat.
The writers are part of the research team of EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research
The views expressed in this article are the authors' own and do not necessarily reflect those of the New Straits Times