GEORGE TOWN – No bank will go bankrupt if a three-month loan moratorium is imposed, said economist Muhammed Abdul Khalid, as demonstrated by the six-month payment postponement last year.
Muhammed, who is former economic adviser to Tun Dr Mahathir Mohamad, said banks will continue to enjoy a healthy financial surplus despite Covid-19’s paralysing effect on the economy.
He is the latest public figure to urge the Finance Ministry to be flexible in allowing a moratorium, in a bid to build up domestic consumption.
“Not one single bank will go bankrupt if they offer a three-month loan moratorium,” he told The Vibes.
“Last year, there was a six-month automatic loan moratorium and not one of them went bankrupt.
“Everyone must sacrifice to assist each other. We cannot just expect the people to face the health crisis alone.
“The government must render the right help and not protect the banks.”
Muhammed said this crisis has impoverished most income groups, so it does not make a difference – the B40 group is struggling as much as the M40 group.
“We should not differentiate between the B40 and M40 when channelling aid as all sides are undermined from the lockdown.”
He disputed a point raised by Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz, who said the government does not have a legal right to order banks to offer loan moratoriums.
“This is inaccurate. When the first movement control order was imposed in March last year, the government directed the banks to offer an automatic moratorium.”
He said many M40 income earners have lost their jobs, adding that the unemployment rate is at 5.1% – the highest in the past 30 years.
He added that banks should also reduce their bureaucratic processes to assist those who need loan moratoriums.
“If aid is comprehensive and effectively disbursed, the people will not have to withdraw up to RM80 billion from the Employees Provident Fund or put on hold up to RM150 billion of loan repayments.”
Muhammed suggested the ministry channels RM1,500 monthly between June and August to each B40 and M40 household to help them cope with the lockdown.
“What is the use of savings when tens of thousands of Malaysians are dying, and thousands more are living in distressed conditions?”
He pointed to six banks wholly owned by the government – Agrobank, Bank Rakyat, Bank Pembangunan Malaysia, Bank Simpanan Nasional, Exim Bank and SME Bank.
There are also other banks in which government-linked companies are stakeholders, such as Maybank and CIMB Bank. – The Vibes, June 6, 2021
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