PETALING JAYA: As the announcement of a six-month loan moratorium under the Pemulih aid package has given the people some economic breathing room, experts caution that the public should be cautious in utilising such an option.
Prominent economist Datuk Dr Zakariah Abdul Rashid said borrowers who are servicing their loans should be mindful that the moratorium would lengthen the repayment period.
“The moratorium is just to postpone payment of debts that are yet to be paid in full. It will immediately increase the amount of interest on the principal because a loan is a time-bearing debt instrument.
“The details of the moratorium facility that will be granted by banks will have to be worked out with the borrowers. The deferment implies an opportunity costs loss to the banks while borrowers will have to pay interests,” he said when contacted.
Like “an almost drowned person who doesn’t have any choice at all,” Zakariah said borrowers and microenterprises that are in dire straits should consider the implications of the moratorium.
“The six-month moratorium granted is consistent with the National Recovery Plan that covers a period up to the end of the year.
“They should take the moratorium facility only if they can fulfil the repayment obligation later.
“They will have to ensure that they will be able to meet this obligation when the situation and their businesses recover later,” he added.
Licensed financial planner Rajen Devadason agreed, saying that those who opt for the moratorium are strongly encouraged to use the extra money in their hands to rebuild their savings if they still have any sort of income to save.
“For those who are in deep financial trouble, the loan moratorium will be most helpful,” he said.
He said that minimising movement is, unfortunately, crushing the capacity of many Malaysians to earn a living.
“We are currently in a very difficult position. In general, almost all of us are poorer because of this pandemic.
“Going out to work in this environment is not ideal, but neither is imploding financially and seeing our families suffer from hunger.
“To make things better, we should try to take on additional part-time or online work,” he said.
Devadason - who is also the chief executive officer of a corporate mentoring consultancy - said those who are still secure in their employment should not take the loan moratorium.
“For those who still retain their jobs, have the ability to effectively work from home and still keep their income levels strong, I urge them not to take the moratorium.
“Instead, I urge them to accelerate their debt repayments. As we work our way through the long journey of repaying our debts, each time we repay one loan or another, we effectively de-risk our financial lives,” he said.
Earlier on Tuesday (June 29), Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said the latest loan moratorium under the RM150bil Pemulih package will not be interest-free, but it would help borrowers by deferring the repayment to a later date.
He said the banks will, however, waive the compounded interest or the interest charged on interest accrued during the six-month moratorium period, as well as any penalty charges.
The method of repayment, including interest charges, is between the borrowers and the banks and borrowers will have to discuss this with their respective banks.