Debts burdensome for 30% of Malaysians — BNM survey

KUALA LUMPUR (Feb 13): Bank Negara Malaysia (BNM) through its Financial Capability and Inclusion Side (FCI) 2021 survey has found that 30% of Malaysians feel that their debts are burdensome, which seems to be a long-term problem among salaried workers in Malaysia.

BNM financial inclusion department director Nor Rafidz Nazri said these debts were acquired during the early working life during their youth, often for unproductive purposes.

“This behaviour is often driven by fear of missing out on [certain] lifestyles. Besides, some debts were for unexpected expenses, such as an accident or the death of the sole breadwinner.

“Such risks could actually be managed affordably through insurance protection,” he said during the #NoFOMO Social Wellness Challenge (#NoFOMOChallenge) campaign launch recently here.

Nor Rafidz further said the FCI 2021 survey also found that personal financial risk management is not a norm among Malaysians, with 47% of Malaysians having difficulty raising RM1,000 in emergency funds, while one in three were not interested in getting insurance or takaful protection.

Additionally, 27% of Malaysians were worried on their ability to meet their old-age expenses, whereby 50% of Malaysian youths have not thought of any retirement strategies.

“Attitudes like living for today and letting tomorrow takes care of itself should be avoided.

“We should actively manage our personal financial risks to provide a financial safety net during unexpected events, in order to achieve our financial well-being,” said Nor Rafidz.

As a member of the Financial Education Network that aims to raise the level of financial literacy in Malaysia, Nor Rafidz said BNM conducts FCI surveys periodically to measure the progress of financial literacy among Malaysians.

Two FCI surveys were conducted in 2015 and 2018, while the latest one was conducted in 2021, right after the economy reopened following the Covid-19 pandemic.

Meanwhile, the #NoFOMOChallenge campaign, organised by the Life Insurance Association of Malaysia (LIAM) and 16 LIAM member companies, is targeting the younger generation, as the group is a key target segment in the industry’s consumer education agenda.

LIAM president Loh Guat Lan said the association had been actively engaging with the younger generation for many years, because it is crucial for them to be well equipped with financial knowledge and should be exposed to personal financial planning as early as possible.

She said this is to ensure that they can make better informed decisions, and become financially responsible adults.

“We strive to reach out to more of them, so that they are exposed to [good] values in life.

“The ongoing consumer education is seen as a strategy to combat misconceptions of insurance, to educate on key issues, and to guide them to become educated consumers.

“Hence, developing healthy financial habits early can set a strong foundation, leading to better financial decision-making, and reducing the likelihood of falling into debt or financial difficulties later on in life,” she said.

Loh said LIAM’s strategy through the #NoFOMOChallenge is to bring youths closer to the industry, while engaging with key opinion leaders or influencers is another way to attract them.

The campaign, which runs until May, aims to inculcate social wellness habits and encourages youths to promote the importance of financial planning through physical, emotional, and financial elements.