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The 1998 financial crisis and the one in 2020. (are they similar?)

An old friend (number of years I have known him, not his age) and I were chit-chatting and he asked me what’s the window of opportunity to buy a property at the lowest possible price. I replied him that I have no idea. In fact I do not know of anyone who could say they know when will the property price be dropping to the lowest as well as where to find these elusive properties. He asked about the current ‘financial crisis’ to which I replied we currently have COVID-19 crisis, we are not in a financial crisis now. At least not yet. He asked what’s the difference since many people are without jobs nowadays and it was the same in 1998.

Let’s look at this actual announcement by our Bank Negara Malaysia (BNM) back in March 1998. Click here for full article from BNM website This announcement was how majority of all banks and finance companies were ‘advised’ to merge. Tier-1 finance companies were identified and advised to absorb the smaller ones. At the time, size matters tremendously and this was what BNM wanted as well, “To ensure that the finance company industry continues to remain sound, the minimum risk-weighted capital ratio requirement for finance companies will be raised gradually from 8% to 10% with effect from 1 January 2000 with an interim ratio of 9% to be complied with by the end of 1998. The minimum capital funds for finance companies will also be progressively increased from the current RM5 million to RM300 million by end-June 1999 and subsequently to RM600 million by end-2000.” Please do read the full article here.

We could see the situation then was not as positive as today. Even if not all banks were in trouble but because of the financial crisis, many banks suffered from defaults from customers and if they fail, then it will affect all depositors and not just the ones who defaulted. BNM definitely do not wish to see any domino effects from failure of some financial institutions affecting all other banks. That was then, yeah.

Fast forward to today, same month, March 2020 versus March 1998 then. BNM announced the moratorium of 6 months. Borrowers who paid on time and in good standing could now STOP paying their home loans and hire-purchase loans for 6 months starting 1st April 2020 and ending 30th September 2020. Briefly, this meant that ALL banks are expected to CONTINUE paying their staffs for 6 months while their customers STOP paying them… I really hope everyone could see a major difference now?

Non-Performing Loan (NPL) numbers? It was just a couple of percentage points away from 20% in 1998. It’s 1.6% as at January 2020. By the way, if the question is whether the NPL can suddenly shoot up, no one can answer you. What is clear however is that the question of whether 2020 is just like 1998 has been answered. Briefly, no. Nowhere near if both years are to be compared side by side.

Yes, I bought a finance counter recently. Just a little and I will forget it for a while first. Should you found that counter you want and is waiting for an extra drop of 2 more sen before you buy, maybe can buy now lah. Not a great time for the stock market meant good value to buy. If you saw a video showing you a property which you love and it happened to be near your office and the developer was throwing in a renovation package, I think it’s a buy lah. Let’s just assume situation got worst a bit more, the developer for that same unit will just add a few more air-con unit. You may not want the developer to give you so much they cut corners or worse case, they ran away half-way, right? However, what IF the situation gets better? Hmm… Happy deciding.

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Next suggested article:  Renovation gets higher returns?

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.


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