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Bank Negara Malaysia asked to implement easy loan scheme for workers

Malaysian Socialist Party (PSM) - December 3, 2009

Rani Rasiah – Bank Negara Malaysia (BNM) got a vivid picture of the impact of the economic crisis on low income workers when a delegation of Parti Sosialis Malaysia (PSM) representatives and affected members of the public pressed for an easy loan scheme, at a dialogue session with central bank officials on 2 December 2009.

The one-and-a-half-hour dialogue took place as about a hundred people waited patiently outside the bank holding a banner that read, 'Seruan kepada Bank Negara Malaysia Daripada Parti Sosialis Malaysia – Selamatkan Rakyat Daripada Perangkap Hutang' (Call to Bank Negara Malaysia by the Parti Sosialis Malaysia – Save the people from the debt trap).

The PSM delegation detailed how the crisis resulted in a sharp drop in income caused by workers being laid off or reduction in overtime work or in the number of days of work. It was pointed out that due to reduced incomes, people were forced to borrow to pay outstanding loans, and because of forbidding conditions imposed by banks they had to borrow from cut-throat moneylenders charging up to 10% interest a month. The PSM made several proposals that the BNM should study and implement at a time of crisis when workers are badly affected.

It was proposed that an easy loan scheme that can take over the role of high interest money lenders be introduced. Such a scheme should make it easy for an affected worker to get a loan, and should impose low interest rates such as the 4% for government servants. Naturally a scheme like this would only be possible if the government places people's well-being as priority over profit making. Considering the billions the government has allocated to rescue the corporate players, an easy loan scheme is not too much to ask for.

Two other proposals were made by the delegation, first for a moratorium on bank loans until the financial situation of the borrower improves, and second for greater flexibility on loan restructuring as regards Islamic banking loans.

In the past two days, I have seen workers break down twice over the issue of wages and debt at two different public meetings. In the first instance at a press conference in Ipoh to refute the Plantation Industry and Commodities Minister's claim of estate workers earning RM1700 a month, a harvester from a Bagan Serai estate began to explain the meager amounts on a pay slip he was holding. Relating the daily struggle to provide for his family, he bitterly said that people like him could not even dream of buying a house on their income. At that point he choked on his words and could not continue.

At the Bank Negara meeting another worker couldn't hold back her tears as she related how the house she and her husband had invested in was going to be auctioned off by the bank during the week because she had defaulted on the loan repayment.

Much pain has been inflicted on workers by the economic crisis. Being lowly paid and heavily dependent on overtime, any fluctuation in production severely affects workers. A factory worker works 8 hours and earns about RM400 a month. Clearly the worker's family will starve if he stops working after 8 hours. So overtime is a must, 12 hours work is a must, as only then can there be a take home pay of RM1,000 odd.

With overtime boosted wages, a portion of workers venture to buy houses or other property. But when overtime is cut workers wages plummet, and they are faced with a disastrous situation. As income remains low, as they default on loans, and as they resort to high interest loans, they fall deeper and deeper into debt.

The government has a duty to intervene on behalf of the workers it allows to be exploited with its low wage policy.

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