malaysian household debt

Controlling the household debt is critical for a country's economy. The central banking of Malaysia is trying to do that.

The growth of the debt was staggering, with credit card growth reached the highest level of 50.4% from 2005 level. The average of the debts was 76.6% of GDP in 2010, and lowered to 75.8% in 2011. Currently the banking loans are mainly on household, forming a hefty figure of 55%, a notable increase from the original 33% in 1998.

If you were to analyse the house loans, they are mainly used for family matters, buying houses and land and other non economic activities. It is a worrying trend to see that 55% of loans are support this. Some may argue, that residential houses contributes to GDP, but it does not form a long term economic value for the nation. Simply stated.. the buyer is getting RMxx for the value of the house, but he has to do more to pay for the loan.

Remember the property slump in 1990, due to over development of residential and household properties. The scars of failures still stand as monuments in a number of locations like Bukit Beruntung to remind us of the need to have a prudent approach to investment.

Now that the Bank Negara had acted, but many feel that it need more than that. The loans can come from agencies not directly controlled by bank negara, such as cooperative society and money lenders. Some cooperative banks are increasing their equity shareholders and reported the highest profit. The Ah Longs are still finding their niches and you go the ATMs, look out for those with think bundle of ATM cards, he may be one of the ahlongs.