Prime Minister Tan Sri Muhydin Yassin should not conclude the slight drop in the unemployment rate in June 2020 to 4.9% down from a record high of 5.3 percent in May 2020 justifies the government’s refusal to extend the existing moratorium on bank loans by another 6 months when it expires on 30 September 2020. In fact the drop in unemployment demonstrates the effectiveness and necessity of the loan moratorium and its extension till March 31 2021.

According to the Department of Statistics (DOSM), the number of unemployed persons was estimated at 773,200, down from an estimated 826,100 the previous month. Year-on-year, the number of unemployed persons still rose by 251,800. The large number of unemployed is still cause for concern due to its impact on social and economic livelihood of ordinary Malaysians, especially the poor. Labour force participation in June stood at to 68.1 % compared 68.9 % in January 2020.

The moratorium on loan repayments extended by financial institutions, which came into effect on April 1, is estimated to be worth RM66.6 billion as of July 31, of which  RM23.3 billion of this figure was utilised by the business sector while RM43.3 billion by the public. PN Government’s unreasonable refusal to extend the existing moratorium on bank loans by another 6 months will cause 7.7 million individual borrowers and 245,000 small and medium enterprises(SMEs) to lose out from this RM66.6 billion.

Such stubborn refusal is regrettable when the cost to banks that benefits ordinary Malaysians and businesses RM66.6 billion is small at only  RM6.4 billion over the 6-month moratorium. This is a small price to pay for the banking industry when it earned an estimated RM32 billion in after-tax profits for 2019.

Even if the banks are unwilling to cough up the cost of RM6.4 billion, the Federal government can bear the cost of RM6.4 billion to aid the 7.7 million individual borrowers and 245,000 SMEs. With the expected weak second quarter GDP growth to be announced soon, there is even greater urgency to continue economic measures that can help shield ordinary Malaysians and businesses from the devastating impact of COVID-19.

An extension of the loan moratorium will be one of the principal financial tools to save Malaysian jobs and small businesses. Otherwise not only will the unemployment rate rise again after September 30, but many small businesses may collapse.

Failure to do so would only give rise to suspicion that the RM 295 billion economic stimulus package PRIHATIN to battle the COVID-19 economic crisis is only heard but not felt, benefiting certain well-connected groups but not ordinary Malaysians and SMEs.

LIM GUAN ENG,

DAP Secretary General