KUALA LUMPUR: The Malaysian government on Wednesday (Jul 29) announced a three-month extension to the loan repayment moratorium for those who lost their jobs this year due to the COVID-19 pandemic.
In a 3pm live telecast, Prime Minister Muhyiddin Yassin said following his discussions with the finance minister and central bank's governor, the government has agreed to carry out a more focused loan moratorium and targeted bank assistance for groups in real need.
Individual borrowers who had lost their jobs and were unable to find new employment as yet would enjoy a targeted moratorium extension for three months, said Mr Muhyiddin. The grace period could be extended by their banks, depending on the individuals’ situation.
Meanwhile, those who were still employed but had undergone pay cuts would have their monthly instalments reduced in line with their new salaries, depending on the type of loan.
“For example, for home or personal loans, monthly payments will be reduced at the same rate as your salary cut. This assistance is for at least six months, and extensions can be given depending on the individual’s salary situation,” Mr Muhyiddin said.
The prime minister had in March announced a six-month loan moratorium as Malaysia went into the movement control order (MCO) to help businesses and consumers weather the paralysing effects of COVID-19 on the economy.
Some quarters such as trade associations and opposition Members of Parliament had called for the moratorium to be extended, as Malaysia reopened its economy in the subsequent conditional and recovery MCO phases.
This latest relief is expected to benefit three million individuals and small- and medium-size enterprises (SMEs), Mr Muhyiddin said in this Wednesday speech, adding that if more needed assistance, banks had given their commitment to consider the appropriate assistance.
In addition, the prime minister said that banks had committed to help all individual borrowers and SMEs who had been affected by COVID-19.
"Depending on the situation of the borrower, the assistance offered includes paying only the interest for a fixed period, or extending the overall loan period to reduce monthly instalments, or offering other forms of relief until the borrower returns to a more stable financial footing," Mr Muhyiddin said.
MORE OPTING OUT OF MORATORIUM: PM
On Monday, Finance Minister Tengku Zafrul Tengku Abdul Aziz had informed the parliament that the country’s banking system is estimated to experience losses up to RM1.06 billion (US$249.5 million) for every extended month of the moratorium.
In the current moratorium period, the minister stated that total losses was estimated to breach RM6.4 billion, equivalent to reducing the banks’ capacities to give new loans worth up to RM79 billion.
In his Wednesday speech, Mr Muhyiddin said the amount of individual borrowers who had chosen to continue paying their monthly instalments had risen from 331,000 in April to 601,000 in July.
SME borrowers who had opted out of the moratorium facility had also increased from 5,000 to 13,000 borrowers in the same period, he added.