Automatic loan halt should be an ‘opt-out’ approach

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PETALING JAYA: Emir Research is of the view that the automatic loan moratorium announced under the government’s RM150bil National People’s Well-Being and Economic Recovery Package (Pemulih) recently should be an “opt-out”, rather than an “opt-in” approach.

The independent think tank cautioned that the benefit might not reach all the deserving categories.

This is given the increasing evidence that nearly all small and medium-sized enterprises (SMEs) have been drastically affected by the Covid-19 pandemic.

“Leaving the loan moratorium facility for SMEs to be subject to review and approval by banks has a danger.

“Apart from financial leverage, it could be more of the toxic combination of operational leverage with falling sales and lower revenues that pushes many SMEs to the point of closure, ” it said in a statement recently.

Citing a recent nationwide survey conducted by the Micro, Small and Medium-Sized Enterprises Association in collaboration with the Klang Parliamentary Office, EMIR Research said rentals constituted about 35% of businesses’ operating expenses.

It said the study revealed that only about 28% of surveyed SMEs had received a 30% reduction from their landlords versus those who did not receive (51%) and those who did not know about the scheme (21%).

“Among the most cited reasons why the landlord refused to give a waiver or reduction of rental included the government offering cash grants to SMEs, the landlord having to service his bank loan (another strong argument in favour of automatic loan moratorium for all), and the landlord facing losses as well, ” it said.

With that, Emir Research said it would appear that “incentivising” the landlords into giving discounts or waivers did not seem to work well.

Hence, the think tank’s standpoint that it should be an automatic “opt-out” rather than an “opt-in” moratorium void of any conditions upon application for all, including non-micro SMEs.

Prime Minister Tan Sri Muhyiddin Yassin unveiled the Pemulih package on June 28.

The aim of the package is to provide comprehensive assistance to the people, focusing on continuing the people’s welfare agenda, supporting businesses and increasing vaccinations.

Muhyiddin said under the financial assistance package, a six-month moratorium would be given to all individual borrowers whether they are from the B40, M40 or T20 groups, or micro-entrepreneurs.

Micro SMEs are also to receive an additional assistance of RM500 in September and RM500 in November. ― Bernama



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