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MEF: Opt-in moratorium should be automatic instead. Why?

MEF: Opt-in moratorium should be automatic. Why?

I am one of the few people who disagrees that moratorium should be offered to everyone, whether or not they actually needed it. I am also one of the few who agrees with the fact that banks are not a charitable organisation and they also have their own shareholders, employees and business to care for as well. Full moratorium like what we have is also not something practiced by any other countries thus far. Please correct me if I am wrong or overlooked.

I agree however that we MUST have moratorium for the ones affected by COVID-19 lockdowns. The reason is a simple one. If we allow these people to fail financially, it will affect not just their livelihoods but also those who depend on them too. I also agree that if the COVID-19 lockdowns are going to continue, then the next round of moratorium should also come in to help those affected by it.

I hope vaccinations will reach a critical stage where everything becomes manageable again. Note that the number of infections are unlikely to fall to zero if we look at the advanced nations where vaccinations have reached 50%. Let’s now look at what the Malaysian Employers Federation (MEF) has proposed to the Ministry of Finance and Bank Negara Malaysia.

Article in thesun.my The Malaysian Employers Federation (MEF) President Datuk Dr Syed Hussain Syed Husman proposed to Ministry of Finance and Bank Negara Malaysia to make loan moratorium automatic instead of by application. In a statement, he said, “And that there should be no interest charges or other charges associated with it.”

He also hoped that the facilities for loan moratorium would not be disrupted during the Enhanced Movement Control Order (EMCO) period in Kuala Lumpur and Selangor. He said, “Even before companies can reach out for help on the recently announced National People’s Well-Being and Economic Recovery Package (Pemulih) programme, they are now subject to EMCO.” Do read his full statements here: Article in thesun.my

Zero interest on the loans because… ?

Moratorium is to help businesses to survive the pandemic amidst the lockdown. Moratorium is not to only help one side and made the other side worse off. If we compare this to the assistance given to the people, the monetary assistance is for meals and all the other basic expenses. It is not to replace the lost salary because it’s just not possible to do.

Losing one’s job also meant that one has to look for another job, pivot accordingly and not just sit at home and wait for the normal situation to return. It’s unlikely to return in a short period of time.

This is why there are no compound interest but it is highly unlikely for the banks to waive the interests because they have already granted the moratorium. Let’s also remember that if we kept pushing the banks, their next target is definitely to reduce their costs…

Let’s be pragmatic and ensure assistance is for survivability. be targeted and do more. Not be too general and sprinkle too little over the ones really needing assistance.

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Next suggested article: Moratorium: No interest and no compound interest are not the same

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com 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. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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