KUALA LUMPUR: The three months moratorium extension for individuals whose livelihood is affected by Covid-19 was important to create a framework for business support and economic recovery for the country as it emerges from the pandemic.
The National Chamber of Commerce and Industry of Malaysia (NCCIM) president Tan Sri Ter Leong Yap said they included the removal of uncertainty on loan moratorium, giving time for borrowers and businesses to make early preparation with their banks to create a suitable flexible repayment programme based on their needs and financial positions.
“NCCIM is relieved to know that all financial institutions will remain committed to assisting SMEs, business traders, hawkers, and self-employment sector that are affected by Covid-19.
“The options include servicing only the interest payment for a specific period, lengthening the whole tenure of loan repayment to reduce the monthly payment, or providing other relief measures until the borrower’s financial position is more stable.”
Putra Business School business development manager Associate Professor Dr Ahmed Razman Abdul Latiff said the extension would assist the borrowers greatly, subsequently helping them to prioritise their spending before they can afford to resume normal repayments.
“I applaud the government’s decision to extend bank moratorium to those in need, as our current economic situation has yet to show a tangible improvement, with many individuals still struggling with job losses and reduced salaries.
“Many small-medium enterprises (SMEs) are also still in the recovery mode, and their main priority at the moment is to keep the business afloat. The extended moratorium will help them greatly,” he said when contacted.
He added a short reprieve would also allow those in need to get their finances in order before the moratorium ends.
Razman said putting an end to the moratorium without extending assistance after September (the earlier date for the end of moratorium) could lead to even greater problems.
“This includes higher non-performing loan cases, which will affect the ability for the banks to maintain its liquidity and its performance, as these individuals and businesses could be declared bankrupt due to their liability commitments that surpass their revenue or income during this pandemic.”
Prime Minister Tan Sri Muhyiddin Yassin in a special address yesterday announced a three-month moratorium extension targeting bank assistance and focusing on those still requiring help following loss of income or employment.
He said after three months of extension, the banks could further extend the moratorium based on the individual situation of the borrower.
As for those who were employed but had to take pay cuts due to the economic impacts of the pandemic, Muhyiddin said their monthly installment payments could be reduced in line with the reduction in their salary, depending on the types of loan.
On March 25, Muhyiddin announced a six-month moratorium that covered the conversion of credit card balance to term loans and restructuring of corporate loans estimated to be worth RM100 billion.
The moratorium which began on April 1 was scheduled to end on Sept 30.
Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said the much-anticipated announcement indicated a clear policy on what was to come after the expiry of the moratorium in September.
“As we are recovering from the pandemic, the moratorium extension is helpful as it covers flexible repayment programmes to assist the borrowers, namely individuals and SMEs with financial relief assistance based on their needs and financial positions.
He said moratorium was more targeted in its execution, compared to the earlier one which he described as automatic.
“This time, it gives better options for individuals, SMEs, and those unemployed based on their needs and financial positions.
“It is flexible in a sense, whereby individuals who lost their jobs for example, will be given three months (of moratorium) with their conditions reviewed for the following three months should there be any need for further assistance.
“As for businesses and SMEs, the banks will tailor options on whether they want to have a longer period of repayment so the monthly repayment will be lower. Alternatively, they can opt to pay interest first, for a specific period.
“The banks will continue to provide the necessary support, and at the same time will help businesses and the economy to recover.”