MCA: Joint effort needed to overcome OPR hike

KUALA LUMPUR: Collaborative effort is needed to overcome challenges posed by the hike in the overnight policy rate (OPR), says MCA deputy treasurer-general Datuk Low Ah Keong.

Expressing concern over the recent hike by Bank Negara Malaysia (BNM), he said banks needed to play their part to ease the burden of borrowers struggling in the aftermath of Covid-19.

“While we understand the need to maintain economic stability, we urge banks and the government to consider the impact of such measures, and believe that collaborative efforts between the government, banks and borrowers is essential to emerge from this crisis with a win-win solution,” said Low in a statement yesterday.

The central bank raised the OPR by 25 basis points to 3.0% in response to the country’s strengthening economic performance and the need to control inflation.

Low urged banks to consider measures such as providing moratoriums or extensions of loan repayment periods to borrowers.

He also suggested that banks offer lower interest rates or restructuring of loans to help alleviate the strain on their customers.

“They (banks) need to engage in transparent and fair negotiations with borrowers who are struggling.

“BNM raised the OPR by 25 basis points to 3.0% as it believes the global economy will continue to be driven by domestic demand.

“However, this move may impact the public, especially the B40 and M40 group.

“While the OPR hike may have benefits such as stabilising the economy, containing inflation and strengthening the value of currency, it is important to consider its negative impact on the people.

“Higher interest rates resulting from the OPR hike may increase financial burden of the public and businesses, reduce purchasing power and potentially worsen the housing crisis by increasing mortgage payments,” he added.

Low said small and medium enterprises (SMEs) might also face challenges due to the hike.

“The increase in borrowing costs may result in higher business costs for SMEs, leading to a potential increase in selling prices to maintain profit margins, and could reduce demand for their products or services,” said Low, who also urged the government to focus on measures that would increase the people’s income.

“This includes policies that promote job creation, increase wages and improve the social safety net for the 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 challenges posed by the OPR hike and create a brighter future for all Malaysians,” Low said.