KUALA LUMPUR: The government must address the bread-and-butter issues of Malaysia's lower income groups, especially their ability to service their loans.
This follows the imposition of a Conditional Movement Control Order (CMCO) in Kuala Lumpur, Selangor, Putrajaya and Sabah.
The National Union of Bank Employees (NUBE) said the government must no longer ignore the urgent need to reinstate the blanket loan moratorium (introduced during the MCO) for at least three months for the B40 and M40 groups, as well as SMEs – not just in areas under the CMCO, but across the country.
It reiterated that the Finance Ministry and banks must stop giving the excuse that the current targeted moratorium, which comes with a slew of conditions, is adequate, thus obviating the need to reinstate the blanket moratorium which expired at the end of September.
"Tens of thousands of low paid workers, while still clinging on to their jobs, cannot afford to resume repaying their loans, as their household incomes have dropped for various reasons.
"Yet, sadly these workers do not qualify for the targeted moratorium and are likely to default on their loans unless the government has a change of heart and hear their plea for help," said NUBE secretary-general, J. Solomon.
Solomon said feedback among NUBE members showed that despite remaining employed, many of them struggle to service their loans from September, as required by banks.
He added that these are employees with family members who were either retrenched or had their salaries cut; while some NUBE members also lost their part-time or weekend jobs due to the economic fallout.
"With the blanket moratorium ending in September, many of our members have been forced to look for buyers for their cars and even re-mortgage their houses to settle bank loans. They have no choice but to take such desperate measures, as they simply do not earn enough due to the economic hardship arising from the Covid-19 pandemic.
"Without the blanket moratorium and in the absence of any sign the pandemic will be contained soon, our members are at their wits' end in trying to sustain themselves and their families. Their situation has been made worse by the implementation of the CMCO in Putrajaya, Kuala Lumpur, Selangor and Sabah, as well as the partial lockdowns in certain areas," he said in a statement.
Solomon said the predicament of NUBE members, who are in the low-wage bracket, mirrors the grave situation across the labour market.
"Many workers do not qualify for the targeted moratorium and are left to their own devices to pay their loans, despite suffering a drop in their income and can't afford to service their loans. This is the reality gripping our country and the banks must respond by extending the blanket moratorium, at least until the end of the year", he added.
If there is any doubt of the need for a blanket moratorium, he said the government must urgently commission a transparent survey to gauge public sentiment, especially among low wage earners, on its need.
"NUBE is confident there will be widespread support for the extension, as the Covid-19 economic fallout has adversely impacted the lives of all Malaysians, more so the lower income groups and SMEs," Solomon said.
He said the re-imposition of the CMCO in the economic centres of the country – Putrajaya, Selangor and Kuala Lumpur – has curtailed business activity and will further impede efforts to revive the economy.
The country's Gross Domestic Product is expected to contract by more than 5 per cent this year. This, by itself, should be enough reason for the government and the banks to do all they can to protect the welfare of the lower income groups, he said.
This mission can be effectively achieved through a three-month extension of the loan moratorium for all B40 and M40 families, as well as SMEs. The blanket moratorium can be reviewed once the economy picks up, something which is forecast to happen in 2021, he added.
Solomon said the government must not wait for the repercussions of the CMCO to take its toll on the millions of people who require help immediately.
"The slowdown of business activity, including virtually empty shopping malls and other business premises, shows that employers and workers will be embroiled in more financial turmoil in the months ahead.
"As such, the government must get banks to respond with effective measures, including the reinstatement of a blanket moratorium on loan repayments as the top priority," he said.
Solomon said the extension of the blanket moratorium for three months would not burden banks, as it will only mean deferred payments for loans of about RM6 billion. This is a fraction of the RM32 billion after tax profit banks are expected to reap for 2019.
The RM6 billion is also not a loss incurred by the banks, but merely a delay in collecting the amount from customers once the economy is on a better footing and a blanket moratorium is no longer needed, he added.
As the umbrella body for non-executive employees in the banking sector, Solomon said NUBE has formally asked the Malaysian Commercial Banks Association to consider getting its members to provide a blanket moratorium on loan repayments for NUBE members until the end of the year.
"However, we also strongly urge the government and banks to provide the moratorium for all those in the B40 and M40 groups, as well as SMEs, as they remain hard hit by the Covid-19 economic fallout. The CMCO must prod the government into reinstating the blanket moratorium without any delays.
"The failure to do so will wreak havoc and create large clusters of families mired in poverty and unable to sustain themselves, as well as failed SMEs, all due to their inability to repay their loans as a result of the government's and banks' ignorance of their hardships," he said.
He also said that the latest Khazanah Research Institute report has showed a glaring disparity in income and savings among Malaysian households.
"The top 10 per cent of households (T10) commanded 30.7 per cent of total income in 2019, while the bottom 20 per cent of households' (B20) share was only 5.9 per cent.
"In the same year, which was Covid-free, the top 10 per cent of households had gross savings of RM12,653 per month on average, while the bottom 10 per cent had only RM200. Going by this figure alone, the government should step in and get banks to provide a blanket loan moratorium for the B40 and M40 families, as well as SMEs, at least until Dec 2020," he urged.
He said regrettably, banks have imposed conditions which ignore the financial realities of most Malaysian households and SMEs.
"As a result, many families and SMEs are 'unqualified' to apply for the targeted moratorium.
"A blanket moratorium for a limited time will ensure no one is left out in the government's effort to protect the livelihood of the people, and sustain the SMEs, during this most difficult period," Solomon added.