JUNE 3 — The Federation of Malaysian Business Associations and Industries Unite represent a combined of over 400 Business Associations/Chambers of Commerce representing one million businesses and by proxy represent the 2.8 million self- employed and micro-business owners and the Rakyat of Malaysia.
We have handed over a letter to our Prime Minister YAB Tan Sri Muhyiddin Yassin, where we have acknowledged the proactive intervention of PEMERKASA PLUS stimulus package but highlighting the moratorium that has been announced as part of the initiative, will do little to move the needle in alleviating the debt commitments of both the rakyat and businesses.
We have proposed eight parameters by which YAB Tan Sri and the Ministry of Finance together with Bank Negara Malaysia will be able to turn this moratorium into a one that is both effective and covers a wider footprint of those not only in B40 but also those in the M40 and all business types — the small, mid-tier and larger entities.
We have also given two very strong reasons why this can be possible.
1. Malaysian Government bailed out the financial systems (banks included) to the tune of RM 70 billion, just over 10% of our GDP in 2008/9. The main beneficiaries were the banking system who were saddled with a high credit exposure and facing an imminent collapse. We feel the banking industry must take a moral stand and step up when the country is in a crisis.
2. The banks can afford it — Eight top local banks collective made a profit of RM 93 billion in the last three years. Using the same denominators — this new moratorium will likely ‘cost’ only RM 6.4 billion which is only 7 per cent of the three-year annual profits for the top eight of the local banks or 20 per cent of their 2020 profits.
The eight parameters and their summary is as follows:
| Details | PEMERKASA PLUS | Our Proposal |
| a. Coverage | Mainly B-40 socioeconomic level | All Malaysians - must include all individual having a banking facility – including employers and employees from the public and private sector. This must be for B40 as well as everyone else who needs it. |
| b. Business | Only affected micro-enterprises | Must include all Malaysian business – small, mid-tier and even large companies - numbering more than 1 million Malaysian business entities, their 7.2 million employers in the private sector and the 2.8 million small business owners and self-employed individuals. |
| c. Facilities |
| All personal facilities must be included – overdrafts, housing loans, car loans, credit cards, personal loans, mortgages must be of any nature. |
| d. Period | 3 months full moratorium or 6 months of 50% instalment | This moratorium must be from now until the 31st December 2021 |
| e. Interest Rate during the moratorium
| Unspecified and left to individual banks. This will eventually be compounded and the banks have been charging high effective rates. | The interest should be on the basis of ‘Cost of Funds’. The banks must be public and transparent with regards to the ‘Cost of Fund’ issue. |
| f. Credit and Leasing Facilities | Only bank facilities covered | The last moratorium (during MCO 1.0) did not include this very fragile yet large group that have high financial exposure especially in industries that have yet to restart their operations for more than 1 year like that of the tourism-related sectors. |
| g. System | Opt-In | Opt-Out: Those who don’t want to take part in the moratorium will need to opt out (same as MCO 1.0) |
| h. Waiver | High interest and restricting cost for any R&R that is being done | All bank charges for this restructuring and rescheduling (R&R) exercise must be waived. |
We have made it very clear why the current moratorium will further push people into a deeper debt situation and a position that we might not be able to reverse if not corrected immediately.
It is no more an option. It is an urgently needed action.
*This is the personal opinion of the writers or publication and does not necessarily represent the views of Malay Mail.
