Malaysia Elaborates on COVID-19 Moratorium and Targeted Bank Assistance

The Malaysian government has just recently announced further information regarding loan repayment moratorium and loan deferral assistance in a speech by the Prime Minister Yab Tan Sri Dato’ Haji Muhyiddin Bin Mohd Yassin. These deferrals are a part of the government’s Prihatin Rakyat Economic Stimulus Package (PRIHATIN), which aims to protect the people, support business and strengthen the economy.

The loan repayment moratorium is set to reduce the financial burden of both the general population as well as the cash flow problems that has arisen for businesses as a result of the implementation of the Movement Control Order (MCO).

“Since it took effect on April 1, the loan repayment moratorium has helped the people and businesses to some extent due to the cessation of almost all economic activities in an effort to combat the spread of the COVID-19 epidemic,” said the prime minister.

“According to data from Bank Negara Malaysia, as of July 20, 2020, more than 7.7 million individual borrowers or 93 percent of all borrowers have benefited from the loan repayment moratorium worth RM38.3 billion. During the same period, a total of 243,000 SMEs or 95 per cent of the total SME borrowers benefited from this moratorium with a value of RM20.7 billion.”

Following the gradual reopening of Malaysia’s economy in May, economic activity across the country has spiked as businesses and workers were eager to return to work. While complete normalcy has yet to be restored, the number of people and organisations that can afford to repay their loans have been steadily increasing. For example, the number of individual borrowers who continue to repay loan instalments and do not take the moratorium facility increased from 331,000 borrowers in April, to 601,000 borrowers in July 2020.

Despite this positive outlook, the prime minister mentions that the government is aware that there are still parts of the economy that continue to face difficult and uncertain situations. A partial lockdown is still in effect, preventing some industries and businesses from operating at peak efficiency.

As such, in an effort to help these organisations who have yet to properly recover from the COVID-19 pandemic, the prime minister has announced a  moratorium extension as well as additional targeted bank assistance.

For individuals who lost their jobs in 2020 and have yet to find a new one, the moratorium will be extended by an additional 3 months for them to take advantage of.  After 3 months, the moratorium period can be extended by the banks depending on their individual situation

Additionally, for individuals who are still working albeit at a reduced salary due to COVID-19, monthly loan instalment payments will be reduced in line with the salary reduction rate, depending on the type of loan.

The moratorium extension announcement also included assurances by banks, who have reiterated their commitment to assist all individual and SME borrowers who have been affected by COVID-19.

Depending on each unique situation, the assistance on offer includes:

• Paying interest only for a specified period of time; or
• Extending the entire loan term to reduce monthly repayments; or
• Providing other relief until the borrower achieves a more stable financial position

For hire purchase loans, the bank will also offer appropriate instalment scheduling options subject to the Hire Purchase Act. These measures are expected to benefit 3 million individuals and SMEs. If more people need help, banking institutions have made a commitment to consider appropriate assistance. Therefore, eligible borrowers can contact their respective banks to apply from 7 August 2020.

For your convenience, we have provided a list of popular banks and their respective contact details: