Not much has changed since the first movement control order (MCO) came into effect in March 2020. In fact, the country is still facing restricted movement and a slew of other restrictions that are affecting workers and businesses in various sectors of the economy, all in a negative way.
Amid the nation’s struggle to get the third wave of the COVID-19 infections under control (and with a fourth wave looming over our heads), it is only a given that people are increasingly wondering about the possibilities of the Government introducing another moratorium on loan repayment.
After all, people are still unemployed, and countless small and medium-sized enterprises (SMEs) are still struggling to get back to their feet. Another moratorium for loans would certainly offer the benefit of additional cashflow for the people.
The first blanket moratorium had benefitted more than 90% in the country, with some 7.7 million individuals and over 200,000 SMEs taking it up.
Theoretically, experts have pointed out that re-implementing a blanket loan moratorium is not a step that will best benefit the country’s economy.
In the words of Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus, “Re-imposing a blanket moratorium would not be a proportionate or responsible response in this current situation.”
She also stated that while the blanket moratorium puts money in people’s pockets in the short term, it creates a lot of economic distortions and has a negative impact on the economy.
While this is true, it doesn’t do much to change the fact that people are still financially struggling and many businesses, especially SMEs, are still having trouble with their productivity rate and stunted cash flows.
Health experts have previously forewarned about a fourth wave of COVID-19 infections in the country, and if this happens, there will certainly be tougher times ahead for everybody.
Think about it: If the people are already struggling to put food on the table for their families, how, then, would they be expected to meet their obligations to the banks?
What is really needed at this point, is for the central bank to extend the moratorium for at least another three to six months.
Yes, the Government has announced a slew of government financial assistances to help the rakyat get back on their feet, are short term and/or one-off cash assistances to particular income groups truly enough to solve this problem at hand?
Maybe by the end of the period, the country will see stronger signs of economic recovery. – April 17, 2021