PETALING JAYA: Legislation alone will not resolve structural issues pushing Malaysians, particularly the youth and informal workers, into cycles of debt, says the Institute for Strategic Analysis and Policy Research (Insap).
Insap chairman Datuk Dr Pamela Yong said that without wider economic reforms, this law may unintentionally tighten credit access for low and middle income groups already struggling with stagnant wages, high living costs and shrinking financial buffers.
"Insap recognises the passing of the Consumer Credit Bill 2025 (CCB) by the Dewan Rakyat as a milestone in efforts to regulate Malaysia’s expanding consumer credit market, including the fast-growing Buy Now, Pay Later (BNPL) segment.
"The Bill’s introduction of a dedicated Consumer Credit Commission (CCC) to oversee previously unregulated credit providers and enhance consumer protection is a positive step," she said in a statement Friday (July 25).
"However, Insap cautions that legislation alone will not resolve the structural issues pushing Malaysians, particularly the youth and informal workers, into cycles of debt.
“Without wider economic reforms, this law may unintentionally tighten credit access for low- and middle-income groups already struggling with stagnant wages, high living
costs and shrinking financial buffers,” she added.
According to Bank Negara, Malaysia’s household debt stood at RM1.63 trillion, representing 84.2% of GDP, which is the highest in Southeast Asia as of December 2024.
The think tank added that this reflects the growing reliance on short-term credit to cope with volatile income and essential spending, especially as the economy transitions from stable industrial jobs to more precarious service roles.
She added that the new fiscal measures such as petrol subsidy rationalisation and SST expansion have increased pressure on household budgets.
"Insap warns that layering new compliance costs on credit providers may inadvertently make credit more expensive or inaccessible, especially for the very groups the law intends to protect - young adults, gig workers and financially excluded households.
"Insap also highlights the importance of institutional clarity, regulatory independence and accountability for the CCC.
"Clear frameworks must govern leadership appointments, scope of powers and stakeholder engagement to ensure transparency and public trust," Yong added.
"Insap also stresses that any reform of the credit ecosystem must be matched by real structural policies that raise income security and job quality, control the cost of essential goods and services, and expand access to financial literacy and consumer rights education.
“The CCB must not become a regulatory plaster over a deeper economic wound. Without bold reforms to tackle inequality and economic insecurity, Malaysians will continue to borrow just to survive, no matter how well-regulated the system becomes," she added.
Insap, set up in 1986, is a think tank focusing on political-economic research. A not-for-profit organisation, Insap develops long-term strategies and policies relevant to the interests and aspirations of Malaysians.
