KUALA LUMPUR: Opportunity has to be given for training or retraining people on how to start their own businesses at this time, said Bank Negara Malaysia (BNM) Governor Tan Sri Dr Zeti Akhtar Aziz.
She said this was done back in 2000, with consolidation and mergers in the banking sector resulting in 4,000 people leaving the banking sector.
“Did it lead to devastation? It didn’t. We recovered within one and a half years from that crisis and people found other things to do.
“Either they started their own business, or were retrained and went into other lines of business,” she said in an interview with the New Straits Times.
Zeti was commenting on people’s concern about inflation especially after the implementation of the Goods and Services Tax (GST), lower purchasing power, and businesses facing lower profit and retrenchment of workers.
She said the government needs to play its role and look at how to ensure sustainable growth at a time when the country is facing this volatility.
She said to-date, the household debt has stabilised and the non-performing loans (NPL) ratio is low at 1.5 per cent.
Zeti said the growth of non-collateral debts had moderated although thay are not all bad, adding that an assessment of further income stream is also important.
“But loans, such as personal loans and credit cards, are now growing at three to four per cent, moderating from more than 15 per cent previously.
“Growth moderated when we implemented policies to rein in excessive borrowing, including from non-banking financial instituions,” she said.
Following this, she said, household debts are less of a concern currently because BNM took measures gradually over about three to four years, adding that it is seeing the results now that it has led to moderation, without causing a significant slowdown in consumption.
She also disagreed with the Real Estate and Housing Developers’ Association Malaysia’s (Rehda) claim of a drop in property sales due to BNM’s stricter financing rules, saying the central bank has introduced responsible lending guidelines which require financial institutions to make an affordability assessment.
“That means that the borrower must demonstrate that they have the capability to service the loan because we don’t want the house to be repossessed when they fail to pay or for it to result in bankruptcies,” said Zeti.
She said a lot of flexibility has been given to the banks but some may have taken it too far.
Zeti said BNM provides the BNMLINK (Bank Negara Malaysia Laman Informasi Nasihat dan Khidmat) for those who have difficulties getting a loan to seek advice or if a bank has treated them unfairly, despite their having demonstrated their affordability.
“They have to be more aggresive and come forward so that we can look into the situation. We also have advisory services throughout the country. They can also engage them by calling hotlines and sending emails and so on,” she said.
She said Malaysia’s household debt level is high at 87 per cent of gross domestic product, but BNM has always argued to analysts and rating agencies that all those who borrowed have demonstrated the capability to service that kind of debt level because of steady or rising income and job security.
The current loan rejection rate is below 20 per cent and approval rate is around 74 per cent, she pointed out.
On coffeeshop talk that the government is running out of savings and trying to reach out to statutory body funds such as the Employees’ Provident Fund (EPF), she said the EPF has a strong investment panel and a strong board.
“It is looking after all of our savings. I believe this for they have done well, generated good rate of returns and been very careful in its investment activities.
“So, I don’t think the government is going to plunder the EPF because it is the people’s savings.”
She clarified that the government’s attempt to improve its financial position by reducing subsidies and introducing the GST has produced positive results.
“This is a period of adjustment for everyone. We can’t always have good times. Those who have built up buffers during the good times will survive better,” she added.