High living cost, low income leads people to borrow

Universiti Tun Abdul Razak lecturer, Prof Dr Barjoyai Bardai said these people also obtained loans to possess the necessities of life, like car and housing.

Yet, there are also those who are forced to make loans because they spend more than their income, he noted.

Barjoyai said although the loans would increase the people's purchasing power and helped to spur the country's economic growth, it had negative effect on the people in the long term.

"With accumulated debts, there will come a time when they cannot pay their loans. This is because of their commitment to service their loans, they do not realise that they have spent the income due to them for the next 15 to 20 years," he said when contacted by Bernama.

Bank Negara Governor Datuk Muhammad Ibrahim was recently quoted as saying that currently, the nation’s household debt stood at 89.9 percent of the gross domestic product, which was among the highest in Asia.

According to Barjoyai, with the current economic situation, the minimum household income in the country should be RM6,000 to RM7,000 a month to be able to live comfortably.

He said with income of 80 percent of the people in the country still below the amount, it was impossible for them to not borrow and to have savings.

"We hope the government remains committed in efforts to increase the income of the Malaysia people in tandem with the objective of making the country a high income nation," he said.

He also suggested financial institutions in the country to create an investment scheme for the people, instead of offering them financing.

"We have that in Islamic financing. Change the concept of loan to investment.

"For example, for vehicle ownership, the banks do not offer financing, but provide the vehicle and leased it to their customers at minimal profit. In principle, the customer does not own the vehicle. Until a certain period, the vehicle can be sold to the customer at a reasonable price," he explained.

He said a similar concept could be applied for house ownership and for purchase of other household items, like air-conditioner and refrigerator to avoid the people from making personal loans at high interest rate.

Meanwhile, a hotel public relations officer, Azlan Naif, 27, said he took up part-time job as his salary at the hotel was not enough to meet the rising cost of living.

"It is not just the increase in prices of goods, because there is the study loan and housing cost to pay," he said.

A private sector employee, Puteri Nur Anisa, 26, said there was the tendency of people with serious debts going to unlicensed money lenders or loan sharks for help.

This often landed them in more problems, she said.

She also said in wanting to make loan settlements, the young people, especially fresh graduates, often spent their income to pay loans.