As economy recovers, Putrajaya urges banks to make loans easier for homebuyers, SMEs

Ida Nadirah Ibrahim
Construction workers lay roof tiles in a residential development in Puncak Alam, Selangor November 1, 2018. — Picture by Yusof Mat Isa

KUALA LUMPUR, June 19 — Banks should ease the process of providing loans to first-time homebuyers and small- and medium-sized enterprises (SMEs) to help the economy grow, the Ministry of Finance urged today.

Its minister Lim Guan Eng also requested banks not to categorise business borrowers, who are not facing loan defaults but wish to improve their cashflow by restructuring and rescheduling loans, as “non-performing loans”.

“Given the positive development, banks should provide greater access to financing to first-time homebuyers, as well as to small and medium enterprises (SMEs) in order to grease economic growth,” Lim said in a statement.

“Household debt on average is sufficiently backed by assets. According to statistics from Bank Negara Malaysia (BNM), the level of household financial assets is 2.1 times household debt. “

He explained that this means households on average now hold more assets than they do debt, which would help them deal with any financial emergencies.

Lim said this should follow the recovery of household debt-to-gross domestic product (GDP) ratio which has dropped by 0.8 percentage points, from 83.8 per cent last year to 83 per cent this year.

The minister said Putrajaya has also provided financial assistance to lower-income households to help them deal with any financial surprises.

This included improved cash transfer programme Bantuan Sara Hidup (BSH), the introduction of the free public health insurance scheme mySalam, and stabilising RON95 petrol and diesel retail prices.

In terms of economic growth, Lim said the increased spending of Malaysian households shows that the economy continues to grow.

Citing the Department of Statistics, he said retail sales had increased by 6.3 per cent to RM41.6 billion in April 2019, from RM39.1 billion a year ago.

Meanwhile, the overall wholesale and retail trade sales in April 2019 increased by 5.3 per cent to RM105.1 billion from RM99.8 billion a year ago, which he said indicates high consumer confidence.

“Together with strong industrial production expansion and a low unemployment rate, these suggest that the economy is expanding,” he said.

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