KUALA LUMPUR (July 23): The government will speed up the process of enacting a new Consumer Credit Act to protect consumers and encourage a healthy credit market, said Prime Minister Tun Dr Mahathir Mohamad.

He said this is important given that the current household debt stood at 82.1% of the country's gross domestic product (GDP).

This is higher than other countries with higher income per capita, like Italy, whose household debt is 40.3% of its GDP, Japan (58.1%), and the United States (76.3%), he added.

"Although the risk of household debt on domestic finance is under control, there are signs of difficulty in repaying loans, especially among those earning less than RM5,000 monthly and are living in urban areas," he said in his opening speech at launch of the National Financial Literacy Strategy 2019-2023 here earlier.

He said this observation was supported by the increasing number of borrowers who participate in debt management programmes organised by the Credit Counselling and Debt Management Agency (AKPK).

"I understand that 80% of the participants in these programmes were too optimistic about their ability to repay their debts and bear the cost of living when they decided to borrow (take loans). Some did not even think of repaying these debts when borrowing.

"Therefore, it is important to increase financial literacy among the people, and the formation of the new consumer credit law will strengthen the protection framework for credit consumers in the country," said Dr Mahathir.

He added that it was vital for consumers to equip themselves with the knowledge to protect against the modus operandi used in financial crimes.

"Users also need to equip themselves with the best practices of technology so as not to be exposed to increasingly sophisticated cyber threats," he said.

The prime minister earlier launched the new strategy at Sasana Kijang. The strategy was formulated by the Financial Education Network (FENetwork), an interagency grouping co-chaired by Bank Negara Malaysia and Securities Commission Malaysia, with founding members comprising Ministry of Education, Malaysia Deposit Insurance Corp, Employees Provident Fund, Credit Counseling and Debt Management Agency, and Permodalan Nasional Bhd.

The strategy will focus on empowering individuals to manage money wisely, plan ahead and invest for their future, and protect themselves from financial fraud and abuse.