I BREAK it into two aspects. First, the aspect of options for borrowers in line of the latest statement by Bank Negara Malaysia (BNM) last night. Secondly is the aspect of political management.
A. BORROWERS OPTIONS
There are three, namely:
- Reject moratorium and pay as usual. If moratorium is accepted, they can choose.
- Settle in full whatever amount due in October 2020. For example, if the monthly installment is RM1,000, they must pay 1000+6000 + RM7,000. No additional interest and no extended loan repayment period are provide. But it will quite hefty to come up with that RM7,000.
- From October onward, you will have to pay more monthly for accrued interest. Of the RM1,000 instance, your monthly payment could be RM1,030 beginning October or based in calculation agreed upon to the loan contract. In this matter, banks will have to clearly inform on the extra repayment but it is also based on whether compounded interest is added on. For this option, repayment period is extended by another 6 months. For instance, it will be 66 months to the original 60 months installments.
The 3rd option is maybe less burdensome since the 6-month accrued interest is equally divided by the balance monthly installment.
B) POLITICAL MANAGMENT ASPECT
Should there be any miscommunications in the next 12-24 hours, the government must admit the shambles in disseminating information. If the government is seen as too defensive and put the blame solely on the rakyat, it is a big mistake. Why is that so?
- This reflects weak communications. For example, BNM’s FAQ too is often changing. Initially the compounded interest is not mentioned and no promise was made on no compounded interest. However, it is now mentioned and is up to the discretion of the commercial banks. (Ref 1st and 2nd attachment)
Initially, the moratorium is said to be automatically given and those who refused can reject it. Now we have to wait for the bank to contact us and we make our choice.
2. In its communique recently, the government failed to tell us that the accrued interest will be imposed. Yes, maybe it’s in the FAQ and technical information but it was not made in simply language. The government should have made a correction from the start to avoid confusion.
In fact, BNM’s early FAQ contains deceiving information too. It said accrued interest will be included but at the same time it also said that loan servicing duration stays. Where is the logic in installment if accrued interest is added on? (3rd attachment)
However, I’m quite cynical with Opposition critics that seemed to enjoy all these. When the moratorium is announced on March 24, I remember that it was the Prime Minister or the Finance Ministry that reported it but through a circular issued by BNM to the Press.
At that time, several PH people commend and crediting BNM as if they had nothing to do with the government (4th attachment). However, they blamed the government 100 per cent when BNM erred.
Well, to me it was not a sincere political game.
Yes, its all about handicap in communications right from the very beginning.
This is also and unusual period. No governments in this world can withstand the pressure. Although I think there should be an economic revival package that supersedes the Prihatin package (I will elaborate on it later on), the government has proven its worth in easing the people’s cash liquidity. Should there be mistakes, just admit it and reach out for them with candor.
UMNO Malaysia, Information Chief
Naib Ketua Pergerakan Pemuda UMNO Malaysia