Covid -19 pandemic has indeed created a huge challenge to all of us in every aspect of our lives including socially and economically. The government has come out with some plans to assist the people. Unfortunately not all affected people seem to benefit from the Prihatin Economic Stimulus Package and the Prihatin SME Economic Stimulus Package

Bank Negara Malaysia (BNM) has declared a 6 months moratorium for all borrowers from housing loans and car loans to as well as fixed rate Islamic financing. Inevitably, the Minister of Finance had to coax the Banks to defer the compound interest to be accrued to the principal. At the time when people are struggling to make ends meet, banks should be more compassionate instead focusing just on into profit making. The Movement Control Order (MCO) which was implemented on 18 March has been extended till 9th June 2020. Some places have been placed under Enhanced Movement Control Order (EMCO).

Throughout this ordeal of MCO and EMCO, more than one million people have lost their jobs and many others also had to take no pay leave or reduced pay. Financial constraints have caused severe family tribulations. This was proven when MCO was lifted to Conditional Movement Control Order (CMCO) many people rushed to pawn shops. The queues at the pawn shops throughout the nation were very long. Many people were there to pawn their jewelleries or to renew their items pawned. Pawn shops are known as the poor men’s bank as many customers are from the lower income bracket (B40) and some from the middle income bracket (M40). Many throng to these shops as they faced financial constraints during this challenging time. It clearly shows that the government aid is relatively insufficient to make ends meet. To rub salt into the wound, some pawn brokers went on to charge on their customer interests despite the fact that the Minister of Housing and Local Government had declared that Pawn Brokers have deferred the interest during the MCO, from March 18 to May 12.

What we seriously need now is an extended moratorium from the present 6 months to 9 months. In another word, banks should provide the moratorium till the end of this year. It is going to be extremely difficult for the general public to pick themselves up after the loss of income, being laid off the jobs and start looking for new jobs and at the same time pay up for all the debts accrued throughout the MCO, EMCO and CMCO ordeal. When people are doing better, they will take more loans and banks will make profit. Banks need customers to keep their cash and take loans. Without consumers, banks will collapse. It is a Win-Win situation. At this challenging time, banks should lend a hand and give in by extending the moratorium.

The MCO and CMCO have since been extended to 84 days, and there is a possibility that it may be extended even beyond if there is a spike in the number of infected people. During this period, with festive season around the corner and with no ending of the movement control in sight, workers are losing their jobs, having their incomes reduced and facing a bleak and uncertainty economic recovery in the future. Thus many families are facing these crises with limited means as well as not having a clear picture of their employment future. The six month deferment of their bank obligations was useful but certainly not sufficient. Hence, it really needs to be extended for additional 3 months, until December.

Daily wage earners and workers in the informal sectors do not have access even to this limited aid given. Some have opened up their business during CMCO but it is not the same as before as not many customers are patronizing their outlets. They are frizzling out since they have to buy raw material and need the capital to churn their sectors. How long it will take for them to start living and make a decent living is a big question in their heads.

FOMCA calls on the government to extend the loan deferment from the present 6 months to 9 months, additional month of October to December. This would enable the workers to hopefully get back into the job market with their current employers and those who lost their jobs with new employment.

Datuk Dr Marimuthu Nadason
President, FOMCA