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Good and bad is relative. Since the future is unknown, no one knows how this moratorium will affect us. If I lose my income in these coming months, then this moratorium can be a blessing. However, if I manage to sustain my income, then I may have the “opportunity” to save money but will there be any negative impact by doing so?

With so much uncertainty due to this pandemic I feel this 6-month moratorium introduced by Bank Negara Malaysia (BNM), although with good intention, it has some feeling of “too good to be true”. Below are some reasons why I am annoyed about this moratorium.

Automatic Opt-In

“Customers are busy, lazy, and often confused, they are surprisingly likely to take whatever option is made the default.”

Richard Thaler – Behavioral economist and co-author of Nudge

Till today, I’m not sure why the default option for the moratorium was opt-in and not opt-out. I don’t have any statistics or forecasts but was BNM expecting the majority of us Malaysian to lose our income during this pandemic?

Wouldn’t it make more sense to have opt-out as default but have the option allowing those with loss of income to opt-in instead? I believe this will allow those still earning to meet their obligations and it will be less disruptive to the banking operations.

Why were we nudge to opt-in instead? I hate to think if there were other motives such as cheap PR stunt or some entities benefiting from it.

Rush and Miss or Lack of Communication

I don’t buy BNM’s claim that it was a miss communication on how the moratorium works for Hire Purchase (HP) and Fixed Rate Islamic financing. The reason being a miss communication should take a few days to rectify and not a month!

And if BNM needs a month to realize this miss-communication and I dare say a mistake, what makes them think we “rakyat” can make a good judgment within two weeks to decide whether to opt-in or opt-out? Why even rush with this initiative in the first place. From day one it has been confusing and it is hard to clarify any doubts on it.

Almost all information on how these moratorium works were coming from other sources such as RinggitPlus.com, iMoney.my, PropertyGuru, and WhatsApp messages but little from BNM or from the banks itself. Were they expecting us to rely on these sources?

I tried calling the banks but no answer. A friend of mine managed to get through, but the banker replied even they were not sure about the procedure or the impact. It’s been more than a month and I have yet to get any feedback or notification from my banks on how these deferments will affect me in the future.

I’m not blaming the banks. I can understand there must be a lot of activities taking place at their back end. My annoyance is why BNM rushed this if the infrastructure to do so is not ready?

Rich Get Richer – Banks

Almost all financial crises occur when the public or investors starts losing confidence in the banking sector. For sure there are other factors such as political stability, but the stability of the banking sector is a must for one to gauge the strength and weakness of a country’s economy.

So, when the news broke that there will be a 6-month moratorium, few thoughts almost immediately popped into my head.

1. Can Malaysian banks survive with less income for 6 months?
2. Will foreign investors view this as a weakness in the Malaysian economy?
3. Are Malaysian banks different and kind enough to their customers?
4. What is the catch?

“A bank is a place where they lend you an umbrella in fair weather and ask for it back again when it begins to rain.“

Robert Frost

So now that we know for sure that the interest payments are accrued for all types of loans, and we as debtors can end up paying more interest in the end, how is this move helping the “rakyat” exactly? Almost all sectors will be affected by this pandemic, but somehow the banking sector has found a way to profit from it. Is this even legal? What gives them the right to get richer during the current predicament?

Rich Get Richer – Debtors

I have heard a lot of plans or strategies on how one can capitalize during this period. Some plan to use the deferred payment to pay off their credit card bills while some plan to use it as a capital for future investments. Then there are some like me who saw this as an opportunity to save them up as emergency funding for future needs.

In fact, with the knowledge that the property market is set to depreciate by 20% plus rumours of BNM dropping the interest rate further between 50 to 75 bps, I even contemplated using the deferred payment as a down payment to purchase another property. I am sure as time goes, there will be other investment opportunities, savings, and debt consolidation strategies (plus scams) surfacing.

Now, all these can only be true if:
1. I do not lose my job or income
2. I am currently a debtor

The point here is that if you are a debtor with some sort of assets that can act as a collateral , but you are not financially affected by this pandemic then you can easily end up richer compared to others. Just a tweak in the system and a debtor like me who owns a mortgage can accumulate more wealth.

Why is this opportunity presented only to debtors but not to non-debtors or debtors that need the deferred payment to make ends meet? It is unfair and it allows inequality as it allows the rich to get richer. Yes, you need to be a certain level of rich to become a debtor with a financial institution.

No Difference

In the end I am just annoyed with myself thinking as a debtor I could somehow capitalize financially during this pandemic. I guess I’m embarrassed to realize I’m no different from the banks.    

I was reminded of this scene from the movie 25^th Hour while writing this post.

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