KUALA LUMPUR – The national household debt relative to the gross domestic product (GDP) saw a sharp increase during the Covid-19 pandemic period, which the Finance Ministry attributed largely to the purchase of more properties by the public.
Its minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz said the low average growth rate of nominal GDP of 1.3% in 2020 and 2021 compared to the 6.6% pre-pandemic level (2017-2019) had also contributed to the higher debts.
According to figures provided by the minister, the average household debt to GDP in 2020 and 2021 stood at 91.1% as opposed to 82.4% in the three preceding years, a 10.56% jump.
“The increase in household debts at the end of December 2021 was especially driven by car and housing loans,” he said in a written parliamentary reply dated yesterday.
Tengku Zafrul explained that the higher loan figures were a result of the sales and services tax exemption for the purchase of new vehicles, as well as various home ownership incentives offered by the government and private sector.
He was responding to a question from Chow Kon Yeow (Tanjong-PH) on the household debt to GDP ratio between 2017 and 2021, before and after Covid-19 reached the country’s shores.
Chow, who is Penang’s chief minister, had also asked for the government’s approach to assist Malaysians facing financial difficulties during this period.
Tengku Zafrul said various measures are being taken, in particular by Bank Negara, to reduce the financial burden on borrowers and ensure their long-term debt repayment ability.
Among these are special financial aids under stimulus packages, allowing debt restructuring, access to financial advice provided by the government, and other assistance to borrowers affected by the recent floods. –The Vibes, March 22, 2022
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