The household debt in Malaysia is very high compared to other countries is a cause of worry said economist Dr Muhammad Abdul Khalid.
He said 50% of the income of Malaysians goes into paying debts. Although this is acceptable for those with savings, it is worrying for Malaysians who do not have savings, Yahoo News reported.
“What is alarming is that 90% of Malaysians have no savings. And 70% of those who have investment like Amanah Saham Berhad, only have RM500 ($127.5) in the accounts,” he said at the 9th Malaysian Students Leaders Summit in Kuala Lumpur, Sunday.
“Young people coming out of university have debts of RM25,000. If they come from a foreign university, this figure is higher.
“Knowing this, the young people, who have no income, still spend their money for other things first before paying off their debt last. This should be first instead, he said and added that financial management among youths are also low.
However, he admitted that is while the government has done a lot to reduce household debts like setting up rules that one cannot take personal loan for more than 20 years, he said companies that offer loans should do much more.
“Companies that provide loans usually do not publish the full interest amounts when offering loans. They just publish weekly interest rates which are low and consumers fall for that,” he said.
He said what is lacking now is financial and consumer literacy.
