KUALA LUMPUR: Bank Negara has called for more inter-agency collaboration to increase the impact of financial education initiatives for the Malaysian public in view of the growing concern on the low financial literacy level of most of them.
Deputy governor Abdul Rasheed Ghaffour said the collaboration could be in terms of providing various touch points at different platforms, involving government agencies, schools, families, workplaces and the financial service industry and has to start from young.
“This is a long-haul journey and requires significant resources and perseverance by various parties,” he said at the launch of the Financial Management for Retirement Module “Shaping the Future Starts Now”.
“What we want to achieve is to improve people’s ability to manage money well throughout their entire life cycle, and their ability to handle periods of difficulties.
“A financially literate population will help to improve the well-being of individuals and households, ensure a sound and competitive financial system and contribute to the sustainable growth of the economy,” he said.
The low financial literacy level of Malaysians was measured by their lack of financial knowledge, attitudes and behaviour.
“Financial literacy is a key life skill. Those who go through life making sound financial decisions will potentially be more resilient and have a higher standard of living throughout their lifetime, including during retirement,” he said.
Quoting the Financial Capability and Inclusion Demand Side Survey conducted by Bank Negara in 2015, he said more than 75% of Malaysians find it difficult to even raise RM1,000 to meet emergency needs.
The survey, among others, also highlighted that only a quarter of Malaysians have any form of investment, and most indicated they would face financial pressure should there be a loss of income.
A significant majority display short-sighted tendencies and are inclined to “live for the moment” – they focus on instant gratification at the expense of long-term financial planning.
On Malaysian’s preparation towards retirement, Abdul Rasheed said only 40% are financially ready.
“A recent focus group discussion with retirees showed that they would still rely on their children or purchase using credit in the event of an emergency or for higher value items. This could be a result of the lack of financial planning when they were younger,” Abdul Rasheed said.
He said the younger population between 20 years and 35 years old perceive that long-term financial planning has a time horizon of the next 10 years to 20 years when in reality, it is a life time journey right.
He said financial education from young serves as a firm foundation to influence behaviour. Towards this end, Bank Negara, in collaboration with the Education Ministry has successfully integrated basic financial education elements into the school curriculums beginning 2014, which will be expanded to all primary and secondary school levels by 2021.
Yesterday, the Employees Provident Fund collaborated with the Credit Counselling and Debt Management Agency to launch the financial education and retirement module, which acts as a guideline in conducting public talks pertaining to the issue.
Abdul Rasheed said the collaboration is timely and in line with the Financial Education Network set up in November last year.