KUALA LUMPUR: Malaysia’s household debt for next year is expected to remain under control in line with more stable income.
Finance Minister Lim Guan Eng said that the ratio of household debt to Gross Domestic Product (GDP) was recorded at 83.2 per cent as at September this year compared to 83.8 per cent for the same period last year.
He said that a large number of the household debts went to property wealth such as buying a house (52.8 per cent); non-residential (6.8 per cent) and investment in reserve funds (5.7 per cent).
“The median Debt Service Ratio (DSR) on the whole is at 32 per cent. However, there are still borrowers with weak financial position.
“Around 6.5 per cent of borrowers have negative financial margin and with income less than RM5,000 a month. In fact with DSR of 60 per cent.
“Therefore, among steps the government took to lessen the debt borne by households was via inculcating responsible credit practice among individuals and financial institutions as well as preventing households from accumulating too much debt,” he said at the Dewan Rakyat today.
During Minister’s Question Time, Lim was answering a question from Datuk Hasan Ariffin (BN-Umno-Rompin) over the ratio of household debt to GDP.
The minister noted that the Credit Counselling and Management Agency (AKPK) also implemented a programme to instill public awareness and skill in financial management.
He said that around 204,000 users had entered the Program Pengurusan Wang Ringgit Anda (POWER!) and over 243,000 borrowers participated in the Debt Management Programme from 2011 to September this year.
He said that the government had no plans to implement a Windfall Tax and that the ministry had informed Bank Negara Malaysia on the need for some loosening to make it easier for loans to buyers of affordable houses.
“We have fixed a interest rate at 3.5 per cent and extended the loan period from five to nearly 40 years to make it easier for borrowers,” Lim said.
He was answering a supplementary question from Hasan over whether the government would implement a Windfall Tax.