Agong ‘sympathetic’ to automatic loan moratorium for the middle class, says Guan Eng

DAP secretary-general Lim Guan Eng speaks to reporters outside Istana Negara in Kuala Lumpur June 9, 2021. ― Picture by Hari Anggara
DAP secretary-general Lim Guan Eng speaks to reporters outside Istana Negara in Kuala Lumpur June 9, 2021. ― Picture by Hari Anggara

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KUALA LUMPUR, June 11 — Former finance minister Lim Guan Eng claimed today Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah was “sympathetic” towards the appeal for an automatic bank loan moratorium for small businesses and the middle class.

The DAP leader said the King had expressed the view during a meeting at the National Palace yesterday, which Lim cited to criticise the Perikatan Nasional (PN) government’s decision against a blanket moratorium.

“During my audience with the King two days ago, I had brought up the financial plight faced by the ordinary rakyat needing government assistance to survive,” he said in a statement.

“The King was sympathetic to an automatic bank loan moratorium... without mentioning the period and more financial aid to save jobs and businesses.”

Malay Mail was unable to verify Lim’s claims at the time of writing.

The PN government is facing mounting scrutiny over its refusal to give an automatic loan payment deferment, which some experts said is crucial to help small businesses and the middle class cope with a third movement control order.

Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz, in defending the call, said a blanket automatic moratorium could be detrimental to the economy.

He had also claimed that the government has no power to compel private banks to let more people defer their loan repayments.

Lim responded by echoing criticism by his colleagues in the Opposition bloc, saying the justification made little sense because the government could evoke Emergency powers to force banks to provide automatic assistance.

“The PN government conveniently forgets that Emergency powers can be exercised in the national interest during this period to compel the banks without any cost to the government,” he stressed.

Banks are currently employing a targeted approach to provide financial assistance to customers based on needs. Depending on their financial situation, borrowers could either apply for a three-month moratorium or cut repayments by half for six months.

Financial institutions had received 1.6 million applications for such assistance, with an approval rate of 95 per cent as at March 26, according to the Association of Banks in Malaysia data.

Lim said the 1.5 million beneficiaries compare unfavourably with the previous eight million companies and individuals who benefited from the automatic bank loan moratorium under the first MCO.

“Under the current moratorium for B40s, banks are not waiving interest but deferring loan payments by accruing interest resulting in higher cumulative loan payables at the end,” he argued.

“In other words, banks do not lose out at all even if there is an automatic bank loan moratorium except the Top 20. Therefore, there is no need for the government to bear any cost to compensate the banking industry.”

Several banks posted upward after-tax profits totaling RM32.3 billion in 2019 and RM23 billion in 2020.

SME Association of Malaysia said at least 50,000 SMEs may be out of business should the lockdown last for another four weeks. About 100,000 SME companies have ceased operations since the first MCO.

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