Malaysian household debt has now soared to an alarming level, reaching RM1.57 trillion, equivalent to 83.8% of the Gross Domestic Product (GDP).
This figure shows a significant increase in debt compared to the end of 2023 of RM1.53 trillion.
With housing loans being the main contributor at 61% of total debt, followed by vehicle loans at 13.5% and personal financing at 12.4%, concerns about debt dependency in households are increasing.
The Minister of Finance, Datuk Seri Anwar Ibrahim, confirmed that the government and Bank Negara Malaysia (BNM) have taken steps to be prudent in order to control the rising debt risk.
The implementation of the Responsible Financing Practice Policy Document since 2012 has been implemented to ensure borrowers only borrow based on their ability, but is this enough?
With the median debt service ratio (DSR) for outstanding loans at 35% and DSR for new loans at 41%, Datuk Seri Anwar Ibrahim emphasized the importance of financial knowledge in this increasingly urgent situation.
Therefore, the government's efforts by holding a Financial Education Network, including the Financial Literacy Month held every October, give the people the opportunity to better understand and manage their finances.
The government also intends to speed up the presentation of the Consumer Credit Act which will set guidelines for non-bank credit providers such as the Buy Now Pay Later (BNPL) scheme.
This measure aims to protect consumers and reduce the risk of excessive debt, especially among young people and those with low incomes.
These initiatives are expected to ensure that the growth of household debt is controlled and in line with the ability of borrowers, for the sake of the country's financial stability.
