KUALA LUMPUR, Aug 1 — Former finance minister Lim Guan Eng chided Prime Minister Tan Sri Muhyiddin Yassin today for not extending the loan moratorium to small and medium enterprises, calling the move regrettable.
The Bagan MP suggested the decision made Muhyiddin appear more keen on funding political coups than helping struggling small businesses, likely referring to a recent attempt to unseat the Warisan-led Sabah government that was thwarted by the dissolution of its state legislative assembly.
A six-month extension of the current loan moratorium would have helped 7.7 million individual borrowers and 245,000 small and medium SMEs, the DAP secretary general claimed.
Warisan, led by Datuk Seri Shafie Afdal, is an ally of the federal Opposition coalition, Pakatan Harapan.
“Such stubborn refusal is regrettable when the cost is small relative to the benefits, banks had lost a total of RM6.4 billion since the implementation of the 6-month moratorium,” he said in a statement issued this evening.
“This is a small price to pay for the banking industry when it earned an estimated RM32 billion in after-tax profits for 2019.”
Muhyiddin’s Perikatan Nasional government came under criticism following its decision to extend the bank loan moratorium for three more months.
The moratorium extension is also limited to jobless individuals hit by the Covid-19 fallout, while SMEs have the option to service just the interest on their loans or extend its duration.
The first moratorium, a key initiative under the RM250 billion stimulus package dubbed “Prihatin”, will end in September and is expected to cost banks RM6.4 billion in losses.
Lim argued that the cost is small compared to the estimated RM32 billion in after-tax profits it earned in 2019.
“RM 32 billion in after-tax profits for 2019 should provide sufficient cover for banks to bear the RM6.4 billion cost of delivering on their corporate social responsibility of extending moratorium of bank loans by another 6 months,” Lim said.
“Even if the banks are unwilling to cough up the RM6.4 billion, the federal government can bear the cost of RM6.4 billion to aid the 7.7 million individual borrowers and 245,000 SMEs.”
The DAP leader added a six-month loan moratorium extension would have benefited low and middle-income earners, most of whom have little to no savings.
Bank Negara Malaysia’s Credit Counselling and Debt Management Agency recently reported that 36 per cent of working Malaysian adults were unable to raise RM1,000 emergency fund, while 24 per cent could survive up to three months with their own savings if retrenched.
“We can expect their financial situation to deteriorate in a more adverse manner with the Covid-19 economic crisis,” he said.
Lim also said the expected losses from an extension is small compared to the tens of billions of ringgit in additional loans over and above the 2020 Budget loan provisions to finance the Covid-19 economic stimulus package.
“The DAP urges Prime Minister Tan Sri Muhyiddin Yassin to stop spending money on political coups to bring down Pakatan Harapan-Warisan state governments,” Lim said.
“Focus on expanding financial aid to small businesses, workers’ salaries and extending loan moratorium by 6 months to save small businesses from bankruptcy and jobs losses.”