Businesses seek blanket interest-free moratorium until Malaysia achieves herd immunity

Businesses seek blanket interest-free moratorium until Malaysia achieves herd immunity
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KUALA LUMPUR (June 11): A group of 14 business and consumer organisations supported by 125 associations has called for a blanket loan moratorium until Malaysia reaches herd immunity from Covid-19.

At a virtual press conference today, the movement, dubbed “Moratorium Untuk Rakyat” also urged the government to push for lenders to make certain additions, including interest waiver during the moratorium period, as well as to include all financing facilities including trade, credit and lease facilities.

Following the latest MCO 3.0 or full MCO from June 1 to June 14 – but which has now been extended till June 28 – the government through the Pemerkasa+ stimulus package has reintroduced a 3-month loan moratorium or 50% repayment deferral for 6 months from June to August 2021, targeted for B40 groups and affected individuals and businesses.

However, the associations argued that this is not enough, considering the uncertainty as to how long the MCO will last and how long affected businesses will remain shuttered or operating at sub-optimal capacity.

“During the first MCO, we did exactly what we are asking the banks to do [now],” said Datuk Ameer Ali Mydin, managing director of the hypermarket chain Mydin Mohamed Holdings Bhd and vice president of the Malaysian Retail Association.

“Instead of reducing the salary, we deferred 50% of salary for staff earning above a certain threshold over six months, after which we repaid that amount across the next 24 months,” Ameer Ali said.

“We are not even asking for the banks to write-off the loans, but to defer the payments,” added MRA deputy president Raymond Teo. “We do not understand why it is so difficult.”

Further, data from trade group Industries Unite revealed that 50% of individuals or members who are supposedly eligible for the moratorium, have failed to receive the assistance or have yet to get their applications approved.

“The focus should be on the many who are in need of the assistance, and not the few. We should have an opt-out system, which also makes the job easier for the banks,” MRA’s Teo added.

The associations pointed to the bank industry’s profitable run for 2020 — when a blanket loan moratorium was conducted across 6 months for the benefit of near 8 million borrowers — to justify that the sector could indeed afford another round of assistance.

“The banks can afford it,” the group said. “This new moratorium will likely ‘cost’ only RM 6.4 billion, which is only 7% of the 3-year annual profits for the top 8 of the local banks or 20% of their 2020 profits.

“We feel the banking industry must take a moral stand and step up, when the country is in a crisis.

“The Malaysian government bailed out the financial system (banks included) to the tune of RM70 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,” the group added.

The group cited an industry survey by the Ministry of Entrepreneur Development and Cooperatives published earlier this month, which found that as of March 2021, 90% of micro SMEs, SMEs and informal sector participants may shut down their businesses if the MCO is imposed continually.

A survey conducted by the Department of Statistics (DOS) during the MCO found that more than two-thirds of self-employed respondents have less than a month’s worth of savings, while 82.7% of private employees have sufficient savings up to two months.

The Federation of Malaysian Business Associations and trade group Industries Unite has submitted a letter to Prime Minister Tan Sri Muhyiddin Yassin on June 2, seeking the blanket moratorium. The associations have also submitted their own letters individually to the government, but with no response to-date, they claimed.

Pundits have largely been expecting the MCO 3.0 to be extended beyond June 14, with daily new Covid-19 cases still averaging over 6,000 in the past week, while active cases remain elevated at above 70,000.

Muhyiddin, at the launch of the recent Pemerkasa+ stimulus package, said the government wants to expedite the National Vaccination Programme and vaccinate 80% of the population by end of this year.

On June 7, Minister of Finance Tengku Datuk Seri Zafrul Aziz said in a commentary that the  repayment assistance is “ongoing, available and forthcoming” to the affected members of the public.

The targeted assistance is effective, the minister said, with 95% approval out of 1.6 million applications received as at March 26, 2021. He also cautioned against using the Emergency Ordinance to force a blanket moratorium, citing future compensation to be paid by the government.

Tan Choe Choe