Just to add some points:
The personal debts chart may not included those outside BNM jurisdiction, namely Bafia 1989 and Dfia. So, debts that is off the radar could be much more i.e PTPTN, private loan, unlicensed loan, koperasi loan and etc. So, the figure posted may possibility under reported.
What has triggered the nerve is the recent growth in personal financing that BNM has little power to control, only until the effective implementation of new FSA soon (to control non bank household lending), maybe by the year end. Just to ponder, the avg loan taken last year alone is an increase of over 60%!! The loan takers were mainly youngster aged below 25 with below RM3k income. This is a non collateralize loan and ...... you know how high the risk la.
I believe the overly dependent of Malaysia economy to consumption (new office, house, malls, cars and other households goods) for the past decade and a half (with the lacking focus of improvement real production capacity) is key the current lukewarm employment & job opportunity/development that impairs our labor market salary expansion which couldn't match the GDP growth that is fueled half by consumption
. In order to maintain good lifestyle, average people has to borrow from the future (loan and credits). Who wants to take pain to face reality??
the development is quite staggering, IMO.......
Home mortgage loan is fallen into household debts or in other words, private consumption though it's collateralize with real assets. It depends how you look at it. For me, I tend to agree with the official definition as real estate, unlike business/industrial loan, will not increase the overall productivity for a nation. Case in point is US which is a typical example and Germany is the other side of the coin.
QUOTE(EddyLB @ Mar 25 2013, 04:20 PM)
I think you are thinking all household debt are related to property debt, correct ? If you are referring to household debt, the usual bank guideline will be between 40%-60% of net income. Ie. If RM10k pm / RM120k pa net income, you can probably afford a property about RM1 mil. So the debt/income should be 8-10 times. What is 1.4 times ? Just chicken feet ratio
Especially like you said, value of properties is going up in long term.
Unfortunately household debt is not property debt only. It includes car debt, credit card debt, personal loan (don't know if education loan included or not, but I think is is part of the household debt).
In the reporting
http://www.themalaysianinsider.com/malaysi...hold-debt-rises, the 4th last paragraph says "The bulk of the growth was contributed by the non-bank financial institution segment (NBFI) such as Bank Rakyat Sdn Bhd and Malaysia Building Society Bhd (MBSB), as concern grows over their lending to the lower-income segments." I think this is attributed to the personal loan to mainly government servant. If you are a government servant with RM4000 monthly salary, the bank will approve you RM200,000 of personal loan.
These personal loan (and car and credit card loan) may be "non-productive loans", meaning it is consumption based instead of investment based (like property loan). So 140% is alarming if we compare to other countries. If the economy slows down, people start to lose their jobs, or interest rate increases, then we will feel the effect of servicing the debt. Suddenly, we need to use additional 20% of our income just to pay the installment.
Mar 25 2013, 05:15 PM
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