KUALA LUMPUR (May 15): Malaysia’s central bank said assistance measures will remain targeted at sectors and borrowers most affected by the impact from the ongoing Middle East conflict.
There is no need for broad-based measures at this stage as overall economic activity and household debts conditions remain manageable, Bank Negara Malaysia governor Datuk Seri Abdul Rasheed Ghaffour said at a news conference on Friday after announcing the latest economic data.
The economic impact, meanwhile, remains uneven across Malaysia, “so assistance has to be targeted as well”, he said.
Data out on Friday showed Malaysia’s economy expanded at a slower pace of 5.4% in the first quarter as consumer spending and business investment moderated while surging exports propped up growth.
The government and authorities have rolled out some measures, including a debt relief programme totalling RM5 billion for small and medium businesses affected by the ongoing tensions in the Middle East. Banks have also pledged repayment flexibility, restructuring of financing facilities, and advisory services to prevent loans from turning sour as borrowers deal with cash flow challenges.
BNM is urging firms affected by rising costs and supply chain disruptions to approach banks early to discuss repayment assistance and restructuring options.
“In fact, the banks have also become more proactive now,” he said. “They identify and reach out to borrowers to ask whether they are facing pressure in terms of loan repayments.”
Household debt manageable
Meanwhile, BNM remains confident in the resilience of Malaysia’s households despite concerns over rising costs of living, Abdul Rasheed said.
Household debt as a proportion of gross domestic product remains stable at around 84% to 85% and “if you look at the quality of household debt, it is not alarming because banks apply very prudent underwriting standards”, he said.
Impaired household loans remain low at about 1%, while most household borrowings are tied to housing assets, he noted.
The banking sector has remained supportive, with targeted repayment assistance and restructuring-and-rescheduling facilities still available since the Covid-19 pandemic, the governor said.