Expert Warns Of Post Aidilfitri Debt Burden Among Low Income Households

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KUALA LUMPUR: Malaysia University of Science and Technology provost Professor Emeritus Dr. Barjoyai Bardai said that the existing debt burden and new loans will cause half of the population — especially those within the B40 group — to continue facing financial pressure. — NSTP FILE PICKUALA LUMPUR: Around 50 per cent of the country's more than nine million low-income households are expected to face debt burdens after the Hari Raya Aidilfitri celebrations due to various loans they have taken out.
Malaysia University of Science and Technology provost Prof. Emeritus Dr. Barjoyai Bardai said that the existing debt burden and new loans will cause half of the population — especially those within the B40 group — to continue facing financial pressure.
He told Utusan Malaysia that this was due to their efforts to prepare for Aidilfitri in the same way as those from the higher-income brackets, despite lacking stable financial resources.
He said it had previously been reported that the amount of personal loans in Malaysia had reached 84.2 per cent of the Gross Domestic Product (GDP), with 70,000 out of 1.6 million civil servants also in debt.
"Malaysia has a high household debt-to-GDP ratio, with most of the debt being attributed to housing, vehicle, and personal loans.
"The addition of existing debt, along with new loans, will only increase the debt load for every household, including low-income groups."
He warned that the consequences of borrowing would become evident after Aidilfitri, as those who borrowed money risked facing bankruptcy when they were unable to repay the loans they had taken out.
In March, it was reported that the number of civil servants applying for personal loans had increased by 10 per cent, or 70,000 people, ahead of this year's Hari Raya Aidilfitri. In non-festive months, about 50,000 civil servants take out personal loans.
Barjoyai also said that the festive season puts considerable pressure on workers, especially those in lower-income groups.
He said that these individuals often borrow money for travel expenses to return to their hometowns, including costs for fuel, tolls, bus fares, and airline tickets - particularly for those with families living far from their place of residence.
He noted that many people are inclined to borrow not for basic needs but to support a lifestyle, influenced by social and media pressures.
Putra Business School economic analyst Associate Prof Dr Ahmed Razman Abdul Latiff said the 2024 Financial Literacy Survey in Malaysia found that only about 40 per cent of the population was able to save more than RM500 each month.
"This survey revealed that the majority of us cannot save more than RM500 per month. As a result, most working individuals do not have sufficient savings to support themselves during festive seasons," he explained.
He added that the lack of surplus income has led many workers to resort to borrowing to finance their Aidilfitri celebrations.
"If they had adequate income, they would not need to take out loans, as they would have a surplus to use for such occasions," he said. - NST

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