By Asrul Hadi Abdullah Sani
KUALA LUMPUR, Nov 5 — Klang MP Charles Santiago said there is a disturbing upward trend of household debt as the ratio of household debt to the GDP has been soaring from 47 per cent in 2000 to 67 per cent in 2007.
Meanwhile, business sector loans from the financial institutions are down from 65.6 per cent in 2000 to 44.1 per cent in 2007.
Santiago described this new phenomenon as amazing because traditionally loans in the business sector are greater than that in the household sector.
He added that this phenomenon is worrying and stressed that the government should take this matter seriously.
“This is because households and buyers are forced to borrow from financial institutions or get credit to accommodate daily expenses.
“In other words, without borrowing from financial institutions, large families in Malaysia will experience a lower quality of life or be in a state of poverty,” he said during a parliamentary debate.
He stressed that the current trend of families being dependent on bank loans to cover the cost of living is very dangerous.
“Another source of loan is through loan sharks and there are no official figures about illegal loans. However, it is clear that our households and communities especially small and medium businesses are dependent on loans from Ah Longs,” he said.
He added that the government should find a solution because many families are living on borrowed money.
“This problem is caused by the low salaries received by our workers. With the high cost of living, including salaries lost because of inflation, the blue and white collar workers cannot accommodate their family’s expenses,” he said.
Santiago urged the government to consider implementing several strategies including the introduction of a minimum wage to help workers overcome their debt.
Santiago also called on the government to withdraw the new charges imposed on credit cards, RM50 for principal card holder and RM25 for supplementary card holder, because it will cause additional financial burden to credit card holders especially the working class and the low income group.
He stressed that it is time to increase the wages of workers in this country.
“It is the government’s vision to change the economic pattern, leading to a higher income economy but in the tabling of the 2010 Budget, the prime minister has failed to define the features of a high-income economy,” he said.
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