DESPITE calls from Umno leaders for a blanket loan moratorium extension, the Government found some support from Opposition leaders for a targeted moratorium instead.
Speaking to FocusM, PKR MP Wong Chen said the Government should not extend loan moratorium for all but target it for certain sectors badly hit by the COVID-19 pandemic, such as the tourism industry.
“I support a blanket moratorium for borrowers from the tourism industry and the B40 group.
“But what is important for the Government is to share the data with all MPs to identify and help the vulnerable groups, instead of leaving it to the banks to tell us who needs help,” he said.
In a recent research note with Finance Minister Tengku Datuk Seri Zafrul Tengku Aziz, entitled “Post-Budget 2021 Dialogue with Finance Minister”, Maybank IB Research quoted the minister as saying that the Government cannot force banks to extend a blanket moratorium if the latter opposes it.
He also said that 85% of borrowers have resumed their loan repayments without the need for any assistance since the automatic blanket loan moratorium ended in September.
“To date, the targeted loan repayment assistance has received 650,000 applications, with 98% approval rate,” Tengku Zafrul was quoted saying.
However, his allies in Umno were unimpressed with Tengku Zafrul’s comments.
Yesterday, Umno secretary-general Datuk Ahmad Maslan issued an ultimatum to the Government; impose a blanket loan moratorium and allow Employees Provident Fund (EPF) contributors to withdraw up to RM10,000 from their Account 1 or risk losing the party’s support for Budget 2021.
Wong Chen said that when coming up with a loan moratorium idea, the Government needs to plan ahead in order to prepare for future eventualities.
“If we think it will take nine months to resolve the pandemic, then plan for nine months.
“We can do these extensions in blocks of three months and then at the end of every quarter, decide on whether we need pursue further extensions,” said the Parliamentary Select Committee for International Relations and Trade chairman.
Help real economy, not speculative market
However, Wong Chen said that banks may need to consider haircut on the interests imposed on loan to deal with the unprecedented times.
“A moratorium is actually a deferment of interests. At some point, banks will need to consider a haircut on interests too.
“We have an overriding duty to protect the banking system to ensure the overall economy is protected, but banks too need to accept reduced profits during these unprecedented times,” he added.
Echoing PKR leader’s sentiments, DAP MP Charles Santiago said a targeted loan moratorium was better at this juncture as some big companies are able to pay back its dues to the banks.
“We need to focus on those in the tourism sector, small and medium enterprises (SME), and bus drivers. They need the moratorium to keep businesses going and pay their employees,” he said.
He cited an example where a school bus driver who had not paid his hire-purchase loan for three months due to the tough economic situation.
“He has not paid for three months due to the conditional movement control order (CMCO) but the banks are still going after him.
“These are the people who need to come under the targeted loan moratorium protection,” said the Klang lawmaker.
Santiago added that any loan moratorium extension should be channeled to help those who participating in real economic drivers instead of speculative enterprises.
“We need to target assistance to businesses that help stimulate the economy by producing multiplier effects, not market speculators,” he said. – Nov 24, 2020.
