KUALA LUMPUR: Banks need to play their part in easing the burden of borrowers who are struggling with the economic aftermath of Covid-19, says MCA deputy treasurer-general Datuk Low Ah Keong.
He said a collaborative effort is needed to overcome challenges posed by the Overnight Policy Rate (OPR) hike
He expressed deep concern over the recent hike in the OPR by Bank Negara Malaysia (BNM).
"While we understand the need to maintain economic stability, we urge banks and the government to consider the impact of such measures on the people.
"We strongly believe that a collaborative effort between the government, banks, and borrowers is essential to emerge from this crisis with a win-win solution," said Low in a statement on Saturday (May 13).
The central bank raised the OPR by 25 basis points to 3% in response to the country's strengthening economic performance and in an effort to control inflation.
Low urged banks to consider measures including providing moratoriums or extensions of existing loan repayment periods to affected borrowers.
He further suggested banks offer lower interest rates or restructuring of loans to help alleviate the financial strain on customers.
"They (banks) need to engage in transparent and fair negotiations with borrowers who are struggling to repay their loans.
"BNM raised the OPR by 25 basis points to 3% as they believe the global economy continues to be driven by resilient domestic demand.
"However, this move may impact the public, especially the group of B40 and M40 who have borrowed money from banks.
"While the OPR hike may have potential benefits such as stabilising the economy, containing inflation, and strengthening the value of the local currency, it is important to consider its negative impact on the people.
"Higher interest rates resulting from the OPR hike may increase financial burden for the public and businesses, reduce purchasing power of consumers, and potentially worsen the housing crisis in Malaysia by increasing mortgage payments," he added.
Low said Small and Medium Enterprises (SMEs) might face challenges due to the OPR hike.
"The increase in borrowing costs may result in higher business costs for SMEs, leading to a potential increase in their selling prices in order to maintain profit margins.
"This could reduce demand for their products or services.
"They (SMEs) will need to find innovative ways to manage their costs and improve their operational efficiency to stay competitive in the market," he said.
Low urged the government to focus on measures that would increase people's income and boost domestic demand.
"This would include policies that promote job creation, increase wages, and improve the social safety net for vulnerable groups.
"We further ask the government to continue investing in infrastructure projects that will spur economic growth and create jobs.
"With the right policies and actions, we can overcome the challenges posed by the OPR hike and create a brighter future for all Malaysians," Low said.
