LETTER: The Covid-19 pandemic has created a huge challenge that impacts every aspect of our lives. The government has come out with plans to assist the people. Unfortunately, not all affected people seem to benefit from the Prihatin Economic Stimulus Package and the Prihatin SME Economic Stimulus Package.
Bank Negara Malaysia (BNM) has declared a 6-month moratorium for all borrowers – of housing loans and car loans, to fixed rate Islamic financing. Inevitably, the Finance Ministry had to coax the banks to defer the compound interest to be accrued to the principal.
At a time when people are struggling to make ends meet, banks should be more compassionate instead of focusing just on profit making. The Movement Control Order (MCO) which was implemented on March 18 has been extended till June 9. Some places have been placed under Enhanced Movement Control Order (EMCO).
Throughout the MCO, more than one million people have lost their jobs and many others have had to take no pay leave or reduced pay. Financial constraints have caused severe family tribulations. This was proven when, after the MCO was eased to a Conditional Movement Control Order (CMCO), many people rushed to pawn shops.
The queues at the pawn shops throughout the nation were very long. Many people were there to pawn their jewelleries or to renew their items pawned. Pawn shops are known as the 'poor man's bank' as many customers are from the lower income bracket (B40) and some from the middle income bracket (M40).
Many throng these shops as they face financial constraints during this challenging time. It clearly shows that government aid is relatively insufficient. To rub salt into the wound, some pawn brokers went on to charge their customer interests, despite the fact that the Housing and Local Government Minister had declared that pawn brokers can defer interest during the MCO, from March 18 to May 12.
What we seriously need now is an extended moratorium from the present six months to nine months. In other words, banks should provide the moratorium till the end of this year. It is going to be extremely difficult for the general public to pick themselves up after their loss of income, being laid off jobs and starting to look for new jobs and at the same time, pay all the debts accrued throughout the MCO and CMCO ordeal.
When people are doing better, they will take more loans and banks will make profits. Banks need customers to keep their cash and take loans. Without consumers, banks will collapse. It is a win-win situation. At this challenging time, banks should lend a hand and give in by extending the moratorium.
The MCO and CMCO have since been extended to 84 days, and there is a possibility that it may be extended even beyond that if there is a spike in the number of infections.
Thus, many families are facing these crises with limited means as well as not having a clear picture of their employment future. The six month deferment of their bank obligations is useful, but certainly not sufficient. Hence, it really needs to be extended for an additional three months.
Daily wage earners and workers in informal sectors do not have access even to this limited aid given. Some have opened up their business during the CMCO, but it is not the same as before, as not many customers are patronising their outlets. They are fizzling out since they have to buy raw materials and need capital to keep their sectors churning. How long it will take to start making a decent living is a big question in their heads.
Fomca calls on the government to extend the loan deferment from the present six months to nine months. This would enable workers to hopefully get back into the job market with their current employers, and those who lost their jobs with new employment.
DATUK DR MARIMUTHU NADASON
PRESIDENT, FOMCA
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times