‘Businesses need breathing space’

Experts: Banks should extend loan moratorium as industries need time to recover

PETALING JAYA: A longer loan moratorium period is needed for businesses in the country to weather the economic effects brought on by the Covid-19 pandemic, say business groups and employers.

Malaysia Retail Chain Association (MRCA) president Datuk Seri Garry Chua said businesses needed “breathing space” for income to return.

“The banks should extend the moratorium until the end of the year. Many small and medium enterprise (SME) retailers need time for their business to return to normal,” said Chua.

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz was reported as saying that borrowers should speak to their banks to request an extension of the present moratorium, which ends on Sept 30.

“On the government’s part, we are still engaging with the banks and it is really up to them (the banks), ” he said on Sunday.

(Malayan Banking Bhd said on Friday that it would not be extending the six-month loan moratorium period.)

Chua said the decision on the loan moratorium period should not be left to the banks alone without government intervention.

“Banks must also sacrifice their profits a bit in these difficult times. They can’t talk about making the same profits as last year.

“Even with the moratorium, banks are still charging interest so they are still making money,” he added.

SME Association of Malaysia president Datuk Michael Kang said while not all SMEs were looking for an extension of the loan moratorium period, some might need a longer time to get back on their feet.

He said about 60% of SMEs did not have sales for about three months due to restrictions under the movement control order.

Some of them had also just started out and would face difficulties once the loan moratorium ended in September, he added.

These businesses, he said, would need more time to build up their sales and profits to service the loans.

While it was best that they approached their bank directly, he said the government could help facilitate the process of obtaining an extension on the moratorium.

“If it was left to the banks, they may not agree,” Kang said, adding that the government should advise banks to assist SMEs who needed help.

“SMEs that face problems and can’t service their loans in October should go earlier and discuss with the banks.

“They can negotiate with them for a longer moratorium or for the payment to be reduced, and if they can pay a small amount within their capacity, they could build trust with the banks.

“It’s a win-win situation as the SMEs can overcome their cash flow issue while the banks can reduce their non-performing loans,” Kang added.

Federation of Malaysian Manufacturers

president Tan Sri Soh Thian Lai said it would be helpful if banks could extend the moratorium for another six months as the impact of the pandemic on businesses was unprecedented.

Soh pointed out that Malaysia’s exports in May dropped by 25.5%, the worst in 11 years.

“Businesses have not fully recovered and we hope banks can consider giving the industries more time,” he said.

Malaysian Employers Federation executive director Datuk Shamsuddin Bardan said the government and Bank Negara had a “duty” towards the country to request that the banks extend the loan moratorium period.

“If SMEs are unable to service their loans, it will lead to them retrenching their workers,” he said.