Best to continue with targeted only moratorium

Datuk Dr Madeline Berma

KUCHING: In the current pandemic situation, it is best for the government to continue with a targeted only moratorium, and not introduce the deferment of loan payment or blanket moratorium at all, said economist Datuk Dr Madeline Berma.

She pointed out that banks were already providing the Targeted Repayment Assistance (TRA) programme during this critical time as well as assisting affected borrowers with repayment assistance, information and guidance in meeting with the loans.

“It is better if banks and clients figure out the finest arrangements to meet the clients’ repayment capacity and financial circumstances.

“Individuals and businesses in need of repayment assistance can contact their banks to determine the best repayment solutions for them,” she added.

Recently, Finance Minister Datuk Seri Tengku Zafrul Aziz stated in a statement that Malaysia should not reintroduce a blanket moratorium or a freeze in loan repayments for all borrowers under the current total lockdown, as it was unnecessary and would not make financial sense when the government needed to ensure sufficient financial resources for the long fight against the Covid-19 pandemic.

Zarful added that at least 80 percent of borrowers in Malaysia did not need this and could continue repaying loans.

In addition, Madeline, an honorary professor of Universiti Malaysia Sarawak (Unimas), remarked that a targeted only moratorium would be preferable to enacting a blanket moratorium.

“I agree with the governor’s loan repayment assistance but a blanket moratorium is not in the best interests of the economy amid this pandemic situation.

“According to Finance Minister Datuk Seri Tengku Zafrul Aziz, the banking sector is estimated to see losses of RM6.4 billion during the six-month loan moratorium period which are losses of approximately RM1.06 billion per month based on Malaysian Financial Reporting Standards (MFRS).

“This indicates that banks might suffer an RM79 billion loss in ability only to offer loans during the six-month blanket moratorium period.

“This is why it is best for the government to continue with a targeted moratorium and not introduce the deferment of loan payments or blanket moratorium,” she said.