PETALING JAYA: Banks should provide greater access to financing to first-time homebuyers, as well as to small and medium enterprises (SMEs) in order to grease economic growth, according to Finance Minister Lim Guan Eng. 

“The financial health of Malaysian households is slowly recovering with household debt as a ratio to gross domestic product (GDP) having fallen to 83.0% in 2018 from 83.8% in 2017. 

“As a result, consumers have more room to borrow for wealth accumulation purposes, either for saving schemes, or for non-speculative investments including acquisition of long-term assets,” Lim said in a statement Wednesday. 

“Given the positive development, banks should provide greater access to financing to first-time homebuyers, as well as to SMEs in order to grease economic growth,” he added. 

According to statistics from Bank Negara Malaysia (BNM), the level of household financial assets is 2.1 times household debt, showing that households on average hold more assets than they hold debt, giving them the necessary buffer to face any financing contingencies.

Lim said inflation in April 2019 was low and stable at 0.2% due to the stabilisation of RON95 petrol and diesel retail prices.

Additionally, the decision of the Monetary Policy Committee (MPC) of BNM on May 7 decision to cut its Overnight Policy Rate by 25 basis points to 3.00% from 3.25% has lowered the cost of borrowing. The reduction has been transmitted fully by the banks to consumers.

“The Government has also requested BNM to remind all banks that business borrowers who are not facing loan defaults, but wish to improve their cashflow by restructuring and rescheduling (R&R) their loans for a longer tenure, should not have such R&R loans classified as non-performing loans,” Lim said. 

According to the Department of Statistics Malaysia, retail sales rose 6.3% to RM41.6bil in April 2019, from RM39.1bil a year ago. 

“The overall wholesale and retail trade sales in April 2019 increased by 5.3% to RM105.1bil from RM99.8bil a year ago, indicating high consumer confidence. 

“Together with strong industrial production expansion and a low unemployment rate, these suggest that the economy is expanding. Industrial production for April 2019 expanded 4.0% year-on-year, beating market consensus of 2.5% as compiled by Bloomberg,” Lim said. 

The unemployment rate for April was 3.4%, unchanged from the previous month. The positive industrial production data is augmented by the fact that the second quarter 2019 average for Nikkei’s Purchasing Managers’ Index for Malaysia is higher than the previous three quarters.