KUALA LUMPUR, Dec 29 — The announcement of the lowest Amanah Saham Bumiputera (ASB) dividend in history has forced part of the 10.2 million unit holders of the investment to set aside additional funds to meet their monthly repayments.
Previously, borrowings relied on high dividend distributions to cover the monthly instalments of loans.
According to a report by Utusan Malaysia, starting next year, borrowers will have to rely on their own funds to fulfil their financial obligations.
In addition, those who have taken the full loan amounting to RM200,000 for a specific period will have to bear additional instalment costs of between RM4,000 and RM5,000 a year.
This has resulted in financial institutions being urged to lower interest rates to the minimum level especially for Islamic financing schemes which still maintain high interest rates, the report added.
At the moment, ASB is offering borrowers the option of rescheduling their loan repayments. However, it is understood few have taken up the offer as this would mean a higher monthly instalment commitment the following year.
Utusan Malaysia said this has caused a majority of borrowers to terminate their loans rather than rescheduling their ASB financing.
According to Director of Research Management at the Global University of Islamic Finance, Professor Madya Baharom Abdul Hamid, told Utusan Malaysia that it would be more prudent for banks to reduce interest rates to assist borrowers, while at the same time, ensuring that the ASB investment continues.
“Basically, in order to invest, an individual must have extra financial resources. However, borrowing money in order to invest is not the right approach — especially when you rely on dividends to service the loan. It is important to remember when dividends are low, the bank does not lose but the borrower does.
“However, most ASB investors are from the B40 group. So, when they meet their repayments, it reduces the equity. What banks can do to help is to reduce the interest for that year where it becomes a win-win situation between borrowers — who are also investors — and the bank,” he was quoted as saying yesterday.
Permodalan Nasional Bhd (PNB) announced an income distribution payout of 4.25 sen per unit for its flagship unit trust fund, Amanah Saham Bumiputera (ASB) for the financial year ending December 31, 2020.
This year's income distribution is the lowest in history, compared to last year which was 5 sen a unit, with a bonus of 0.50 sen a unit.
Advisor to Persatuan Penganalisis Teknikal Malaysia, Nazarry Rosli, said ASB investors that have taken bank loans and are able to bear the ‘losses’ are advised to continue with their investments.
“If they cannot afford, it is better to cancel the loan. If we follow the concept, we invest in a profitable situation.
“However, in the current situation, what other investments have higher returns? At the moment, ASB investments are still better compared to other instruments, without any risks,” he said.
