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KUALA LUMPUR, July 4 ― The Malaysian Trades Union Congress (MTUC) has urged the Finance Ministry and Bank Negara Malaysia (BNM) to ask banks to consider extending the moratorium on loan repayments by at least another six months.
In a statement today, MTUC secretary-general J. Solomon said this was needed especially for targeted groups who are still unable to service loans such as for housing and vehicles.
“For banks to adopt a ‘business as usual’ attitude and expect workers who are still mired in job losses and with little or no income, to resume paying their loans, is a downright cruel and inhumane act against the borrowers,” he said referring to many of the 800,000 workers who lost their jobs up until April this year while thousands more were forced to take deep pay cuts or go on unpaid leave.
Citing official statistics, Solomon said it clearly showed that many workers have been rendered unemployed due to the economic downturn caused by the Covid-19 pandemic.
“The opening up of the economy is an ongoing albeit slow process and it will take time for workers to get back on their feet and service their loans,” he added.
It was reported yesterday that BNM said it was unlikely that financial institutions would extend the six-month moratorium on payment of monthly installments for vehicles and housing loans which will end on September 30.
BNM Assistant governor Adnan Zaylani Mohamad Zahid reportedly said that the economic recovery would continue and that BNM has no intention of extending the moratorium as it would have repercussions that it wanted to avoid.
Adnan’s statement was consistent with Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, who on June 28 said that it is up to the banks if they wish to extend the loan moratorium in a targeted way.
“There should not be any doubt on the part of the government, especially the Finance Ministry and Bank Negara, that a large slice of the workforce are far from ready to resume servicing their car and housing loans.
“If the banks persist to ‘collect’, then we can expect to see record forfeitures of vehicles and homes of the working class which will inflict untold misery on them and their families,” Solomon said.
He added that the same extension should also be given to companies with loan facilities who are struggling to keep afloat during this pandemic .
“Stop mollycoddling the banks. There is no question of banks incurring losses because of the moratorium.
“(But) the loans are not written off but merely deferred until the economy normalises,” he said.
He also said that there are no losses to speak of but merely a temporary deferment of monies that would be returned to the banks coffers later.
“As such, Adnan's claim that the six-month moratorium granted in April had cost financial institutions some RM47.5 billion is nothing more than a blatant attempt to twist the facts and pander to the interest of the financial institutions,” he said.
Solomon further explained that if at all, only a reduction in profits is possible due to loss of reinvestment interest and liquidity cost.
He said loss of reinvestment interest is in any event was inevitable given the draw back due to the pandemic.
“In that sense the question of losing reinvestment interest is no justifiable cause.
“Therefore, what we cannot comprehend is as to how the BNM arrived at the RM47.5 billion loss arising only due to liquidity cost,” he said.
He also recalled that in 2019, all the banks in Malaysia recorded multi billion ringgit in profits, as had been the case for so many years.
“In facing Covid-19, both the Finance Minister and BNM have repeatedly said the banking sector remained strong with more than adequate financial liquidity,” he said.
As attested by BNM, Solomon said all these point to a strong and vibrant banking sector that is easily able to grant a further six month extension to needy Malaysians who are in dire need for it.
“The banks have a moral obligation to do this and both the Finance Ministryincluding and BNM must stop making excuses for them not to do so.
“If necessary, the Prime Minister Office must intervene for the sake of the rakyat,” he said.