KUALA LUMPUR: The rat race to flaunt one’s wealth is the primary cause of the record household debt in relation to the Gross Domestic Product (GDP) ratio in the country, notes Malaysian Islamic Understanding Institute (Ikim) director-general Datuk Nik Mustapha Nik Hasan.
He said most households were currently seen to be living beyond their means, causing them to fall heavily in debt from excessive spending.According to the Financial Stability and Payment System 2013 Report issued by Bank Negara Malaysia, he said 47.1 per cent of household sector debts were attributed to the purchase of properties.
He said motor vehicle purchase took up about 20 per cent, non-residential property purchase (9.4), personal consumption (8.3), purchase of securities (7.8), credit card purchases (5) and other expenditure (2.4).
Nik Mustapha was speaking to reporters after opening the two-day ‘Seminar on Household Debt Burden: Cause and Solutions’ at IKIM here yesterday.
He said the rising trend of household debt each year had made Malaysia the country with the highest household debt in Asia, at 81.1 per cent of the GDP in 2012, increasing to 86.8 per cent of the GDP last year.
“As such, the people should be educated to spend prudently and avoid falling into a debt crisis,” he added.
Eight working papers will be presented at the seminar to discuss the current household debt scenario, identifying the cause of rising household debt in Malaysia and seeking solutions to the household debt problems. — Bernama