Malaysians getting into debt to sustain lavish lifestyles; Civil servants and low-income earners were having bigger household and personal debts than those in the middle and high-income groups

Malaysians getting into debt to sustain lavish lifestyles

Civil servants and low-income earners were having bigger household and personal debts than those in the middle and high-income groups. -The Star/ANN
Sun, Jun 16, 2013
The Star/Asia News Network

PONTIAN – Malaysians are getting themselves deeper into debt, leading to many youths and university graduates becoming bankrupts even as they enter the job market.

Deputy Finance Minister Datuk Ahmad Maslan said civil servants and low-income earners were having bigger household and personal debts than those in the middle and high-income groups.

He said most of those trapped in the debt syndrome were earning below RM3,000 (S$1,205) a month.

“One of the reasons they are borrowing money is to sustain an extravagant lifestyle, including buying things using credit cards.“If they failed to get personal loans from commercial banks, they would go to other financial institutions, such as cooperative bodies, for loans and some even resort to borrowing from illegal moneylenders.

“Peer pressure is also one of the factors, especially among fresh university graduates who have just started working but wanting to use branded items as they do not want to lose face,” he said, adding that many youths and university gra-duates were becoming bankrupts even as they entered the working world.

Ahmad was speaking to reporters after opening a Bank Negara mobile counter here yesterday.

He said buying houses and cars were the main reasons for households to be in debt, followed by credit card spending on luxury items.

Ahmad said although the situation had not reached an alarming stage the trend was worrying, with Malaysia having the highest household debt in the region.

He said the debt rate at 82.9 per cent of the gross domestic product (GDP) was higher than the country’s debt level of 53 per cent.

“The accumulated debt is about RM800bil, whereas Malaysia’s current debt is RM500bil,” he said, adding that the Government would ensure the national debt level would not pass the 55 per cent mark of the GDP as this could spell trouble for the country.

Ahmad said the Government was looking at ways to reduce prices of houses and make them affordable especially for first-time house buyers.

“Prices of cars are going down gradually and we want to do the same for houses and this agenda (affordable housing) will be included in Budget 2014,” he said.

Ahmad said that while the Govern-ment would take proactive measures to reduce the prices of houses and cars in Malaysia, it could not do much to control the lifestyle of Malaysians, including those who wanted to lead an extravagant life.