The latest announcement on the moratorium extension and targeted bank assistance can help strike a balance between helping borrowers while also ensuring the banking industry is to be able to fund economic activities and support economic recovery.
University of Malaya Economics and Administration Faculty senior lecturer Dr Mohammad Tawfik Yaakub said the government is no longer able to fully bear the prolong economic impact faced by the people and the targeted approach assistance strategy is an option to help affected groups, as well as boost other economic sectors such as financial and banking.
He said the implementation of the targeted approach assistance was already expected following a statement by the Minister of Finance in Parliament, which gave an impression that a new mechanism was in the offing to help the people affected by the recent economic sector closure.
"I am confident that the government's decision to pursue the targeted approach assistance and moratorium extension, especially for those who have lost their jobs, is based on its awareness that the percentage of people who have lost their jobs and income is high and increasing," he told Bernama.
Mohammad Tawfik said if the government does not pursue the targeted approach assistance, a chain reaction phenomenon would occur, especially involving people who have lost their jobs and income.
"For example, it may aggravate social problems, while putting small businesses at risk of collapsing, becoming lethargic or resulting dumping as petty traders who are in involved in businesses such as selling banana fritters, burgers and bundles are losing their jobs," he said.
The National Chamber of Commerce and Industry of Malaysia (NCCIM), in a statement, said today's decision would help remove uncertainty pertaining to loan moratorium, while allowing individuals and businesses the time to make an early preparation to engage their bankers in crafting a suitable flexible repayment programme based on the financial positions and needs of borrowers.
Its president, Tan Sri Ter Leong Yap said the chamber is also relieved that all financial institutions would remain committed to assist small and medium enterprise (SMEs), businesses, traders, hawkers and self-employed affected by COVID-19.
"The options include only servicing the interest payment for a specific time period or lengthening the whole tenure of loan repayment to reduce the monthly payment or provide other reliefs until the borrower's financial position is more stable," he said.
Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid is advising individuals, who did not receive moratorium extension but have financial problems, to come forward and negotiate with the respective banks.
"For those who didn't get the extension, I recommend that they be honest and transparent in declaring their financial position," he said.
He said from there, the bank could plan the best programme to ensure that the borrowers is always in a good financial position," he said in the "Malaysia Petang Ini" prgramme aired on Bernama TV.
Meanwhile, Bank Islam economist Adam Mohamed Rahim said the announcement is expected to ease the decline of the Bursa Malaysia Financial Services Index which has fallen by more than 10 per cent on a year-to-date basis so far.
"Hence, in light of this latest approach, we could expect the index to pare down some losses moving ahead.
"The reason being is that the latest targeted approach could probably prevent losses in the banking sector from ballooning substantially," he said.
Earlier, Prime Minister Tan Sri Muhyiddin Yassin announced the extension of loan repayment moratorium by three months for those who have lost their jobs in 2020 due to the fallout from the COVID-19 pandemic and have yet to secure employment while a targeted approach would be undertaken for the rest.
He said after three months, the moratorium period could be extended by the respective banks according to each individual's situation.
-- BERNAMA
Bernama
Wed Jul 29 2020
Mohammad Tawfik said if the government does not pursue the targeted approach assistance, a chain reaction phenomenon would occur. - Filepic
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