PETALING JAYA: MCA has expressed its concern that the yen credit loan will increase the country’s external debt.
Wanita MCA vice-chairman Datuk Ong Chong Swen said the act of seeking additional yen credit was equivalent to taking needless risks.
She said that the country’s debt-to-GDP ratio hit a peak of 103.4% in 1986 and it had simmered down to only 50.8% last year.
“Currently, our debt consists of very little external financial obligations. In fact, most of what our country owe is to our own people.
“Borrowing money from our own citizens is also known as internal debt and this sort of debt is mostly calculated in Malaysian Ringgit, hence, much less of a hassle to settle.
“The bigger problem lies with the repayment of external debt and the withdrawal of foreign capital,” she said in a statement on Thursday (June 14).
She added that there were considerably higher risks when foreign credits are acquired due to the fluctuations of currency exchange.
Ong said she was concerned that the move will actually cause Malaysia to plunge into a foreign debt crisis.
“Malaysia’s debt consists of 98% internal debt and 2% external debt. About one-third of our external debt already requires repayment in the Japanese debt.
“In 1983, Dr. Mahathir had too, borrowed 81.5bil yen from Japan. At the time, the exchange rate is about RM1 to 100 yen, thus we were supposed to owe Japan about RM8.15bil,” she said, adding that 20 years after that, the yen appreciated almost 3.73 times against the ringgit.
Ong said it should have been the lesson to the leaders that the country has to be prudent when it comes to foreign debt and to not take unreasonable risks with the people’s money.
She also urged the government to think long-term and to properly assess the actual national debt situation, because in the end, the rakyat may have to foot the bill due to the leaders’ poor judgment.
Prime Minister Tun Dr Mahathir Mohamad has asked Japan to extend its yen credit in the form of soft loans, some of which may be used to retire old loans to offset high borrowing costs during his courtesy call to Japan Prime Minister Shinzo Abe recently.