Bank Negara working on financial literacy roadmap

Bank Negara is currently developing a five-year national strategy with the aim of elevating financial literacy among Malaysians.

Focusing primarily on three main thrusts – clarity, collaboration and commitment – Bank Negara deputy governor Abdul Rasheed Ghaffour said the aspiration and objectives of a national strategy for financial literacy had been carefully articulated by the Financial Education Network (FE Network), which was established late last year.

In his keynote address at the Federation of Malaysian Consumers Associations (Fomca) Conference 2017, Abdul Rasheed said strategic outcomes, priority areas and target groups under the national strategy had been identified.

“The national strategy for financial literacy has identified five strategic priorities which cover all life stages – from nurturing values among young children to inculcating positive behaviour for adults and preparing Malaysians to retire comfortably.

“Specific action plans would be formulated to reach out to the masses, as well as meeting the needs of specific target groups.”

Commenting on the three thrusts, Abdul Rasheed said “clarity” is aimed at having a clear vision to realise the financial well-being of Malaysians by advancing and elevating financial literacy.

“Our vision aims to shape a society characterised by responsible financial behaviour; the ability to manage finances well; and to achieve financial security. A population with a high sense of financial well-being has the financial freedom of choice to enjoy life.”

He emphasised that financial well-being is a pre-condition for a more productive, resilient and inclusive economy.

“Indeed, the journey to attain individual financial well-being is a journey worth taking, and it will be a long journey too. Thus, over the longer run, the implementation of the national strategy will be aligned to the longer-term government aspiration under the Finance Cluster initiative of the Transformasi Nasional 2050, or the TN50.”

Abdul Rasheed noted that financial well-being is not about being rich, but rather the ability to live within means and making responsible financial decisions.

“The state of the financial well-being of an individual is a reflection of two factors – firstly, his or her level of financial literacy, and secondly, a person’s economic background.”

Separately, he said the “collaboration” thrust required strong and long-term efforts by all stakeholders including regulators, the private and public sectors, non-governmental associations and consumers themselves, to realise the desired outcome of improving financial literacy.

“Each stakeholder has their own strength. While some are subject matter experts providing reliable financial education to the targeted audience, others may have access to critical contact points to reach out to the masses.

“Often times, many agencies are also well-positioned to leverage on ‘teachable moments’ such as at the stage of starting a job; getting married; or preparing for retirement, where key financial decisions are made.”

He said the national strategy would be a catalyst for the stakeholders to leverage on each other’s strengths, resources, expertise or even authority in providing a holistic financial education and in reaching out to Malaysians nationwide.

Whitman Independent Advisors Sdn Bhd founder and managing director Yap Ming Hui said the financial literacy level of Malaysians today “was quite low”.

“For most of today’s youngsters, namely, the Generation Y, personal finance is not a priority. We need to educate them on why it is important for them and how it is relevant.”

Yap said a mindset shift would be imperative for today’s youths to improve their financial literacy levels.

“Today’s youths don’t read the newspapers. Their source of information is mainly via social media. Today’s younger generation really need to adapt their way of receiving information.”

One industry observer agreed that education would be crucial towards improving financial literacy levels within Malaysia.

“Many are put off by financial or wealth planning because it’s some- thing that they fear or do not understand. Education is crucial to overcoming this.

“This would include education in terms of investing and its usefulness as a hedge against inflation, as well as learning how to make your money work for you rather than having to work for your money.”

He added that many individuals also only considered investing and saving money once they reached retirement.

“It’s a mistake many people make. When they’re working and earning money, they don’t think about the long term. They focus on immediate things like buying a brand new car or going on an expensive vacation.

“As they get closer towards retirement, only then do they realise that they have not planned for their old age. Planning is crucial right from the beginning.”

Abdul Rasheed said elevating literacy levels and achieving financial well-being would remain as only the hopes and dreams of Malaysians – unless the final thrust, “commitment,” is made.

“Financial education initiatives under the national strategy will be inclusive, be evaluated and enhanced over time to ensure that they remain relevant and impactful.

“The FE Network is committed to playing a leadership role to achieve the targeted outcomes of our national strategy.”