Loan moratorium : Extend until 2021?

By ZAIDI ISHAM ISMAIL
editor@dagangnews.com

SHAH ALAM 7 Sept. - October 1 will be an important date for the rakyat. This is the day when the 6-month loan moratorium ends. A lot of debate has taken place among Malaysians on the loan repayment relief. Be it politicians, economists, trade unions or the average rakyat, the parties are divided.

Should the loan moratorium end or be extended? Opinions and commentaries are bandied about on whether the government should prolong it or just snuff it.

For the sake of the country's economy, economists want the moratorium to end as it will impede the country's fiscal performance.

Trade unions argue that banks are still solid as a rock able to cushion the blow and want the moratorium to be extended as far as 2022.

What is clear is that COVID-19 is still rampaging around the world.

Although the situation is under control in Malaysia, the fact of the matter is, a small percentage of the rakyat are still being infected by the pandemic by the day.

Thus it is not surprising that economies around the world are slumping. Australia has officially entered into an economic recession.

In Malaysia, although the economy is expected to recover by year end, there are still a lot of Malaysians who are jobless, around 800,000 to be exact.

Companies are still struggling to ride over the challenging times and the worst part is, COVID-19 is still far from over. And it will continue to be challenging until we find a vaccine, of which some experts say will only be discovered as early as 2021.

Taking this into consideration, the debate rages on - should the moratorium be extended or put on skids? Should the government replace it with a moratorium with a targeted approach?

Universiti Putra Malaysia's Professor Datuk Dr John Anthony Xavier said extending the moratorium is not a good idea as companies have to be competitive and stand on its own.

"We cannot create anymore zombie companies. It's time that they face reality and be more cost effective," Xavier told DagangNews.com.

Malaysia Trade Union Congress secretary general J. Solomon had said that the banks are solid with ample liquidity able to buffer the hard times.

Furthermore, banks can extend further the tenure of their loans at the end of the loan term of each borrower by an additional six months.

For the record, Finance Minister Tengku Datuk Seri Zafrul Aziz had said that the government cannot compel the banks to extend the moratorium which to date had cost the banks RM78 billion.

That is true, but the government also has the clout to influence the banks to extend the moratorium. It's just a matter of political will by the ruling government.

And now we have a scenario, of which proponents of the loan extension have been calling on the government to extend it.

On another side of the camp, are the detractors who oppose the extension of the moratorium. Whichever way, the government is stuck in the middle and it will have a tough time to decide by end of this month.

Prime Minister Tan Sri Muhyiddin Yassin will be hard pressed on what to do with the current situation. On one hand, he has to ensure that the economy does not dive into a recession.

On the other hand, he must walk a tight rope balancing the delicate plight of the jobless who are clearly not out of the woods.

Whichever way, one side of the equation has to give and the authorities must devise a contigency plan to minimise the impact either on the economy or the rakyat. - DagangNews.com

The writer is former NST Business assistant editor