Why the moratorium must end

There are those who continue to experience hardship, and they should be helped


THE moratorium is coming to an end in a few weeks’ time. Some have called for it to be extended for everyone, but like most Malaysians, I am glad that the prime minister has announced that the extension of the moratorium and offering of repayment flexibility will be done on a more targeted basis. This will help those who have been affected the most, such as the unemployed or those who have had to take pay cuts.

While I agree that many experienced a lot of hardship during the Movement Control Order, the situation today is very different. I can understand the desire of the government wanting to provide a helping hand to as many Malaysians and businesses, given the strict lockdown.

But look at the economy today. Shopping malls and restaurants are packed. Traffic jams have returned. Online businesses continue to do brisk trade. Yes, some sectors, such as tourism, continue to suffer. Even then, there are signs of green shoots.

There are reports of beaches being overcrowded so much so that some have suggested restricting access. Malaysians, who typically go on holidays overseas, are now opting for staycations and local travel. The government has also decided to reintroduce hotel quarantines for Malaysians returning from overseas. This guarantees room occupancy for participating hotels.

I am not saying that everything is back to normal, and that banks should start demanding that all borrowers resume paying instalments in full. Far from it. There are those who continue to experience hardship, and they should be helped. But for the vast majority of those who have the means, they should start paying down their loans. Otherwise, this may lead to an imbalance of supply of credit in the economy.

The T20s (top 20% income group), who enjoy the moratorium, can use the money for things such as to speculate in the stock market, like in glove stocks, while banks have less lending capacity to provide new loans to businesses. This is poor use of the country’s resources.

I am also sure that all Malaysians, as depositors, are concerned about the protection of their deposits. Banks can pay interest on and honour withdrawals of deposits because they are backed by high quality, income-generating assets. If borrowers do not repay their loans, this makes for bad asset quality. We should remember what the country went through during the Asian financial crisis.

Sungai Buloh

The views expressed are of the writer and do not necessarily reflect the stand of the newspaper’s owners and editorial board.