Chong Chieng Jen
KUCHING (Sept 9): Democratic Action Party (DAP) Sarawak chief Chong Chieng Jen claims that the Bank Negara Malaysia’s (BNM) decision to increase the Overnight Policy Rate by 25 basis points to 2.5 per cent is hurting everyone.
The Stampin MP said such decision will in turn cause more harm to the country’s economy than do good.
“This is the third time BNM increases interest rate this year, raising it from 1.75 per cent in the beginning of this year to 2.5 per cent. This 0.75 per cent interest rate increase will hurt all those people having housing loans and other bank loans,” he said in a statement today.
As an illustration, Chong said for a person having a housing loan of RM300,000, a 0.75 per cent increase in interest rate meant an increase of RM2,250.
“In other words, the housing loan borrowers will have to pay an additional RM187.50 per month because of the interest rate increase by the government this year alone.
“BNM’s increasing the interest is not only hurting the general borrowers of bank loans, it does not help to curb inflation in Malaysia,” he said.
He reminded all that before this, BNM had increased interest rates twice this year, yet the country is still experiencing high inflation rate.
According to him, this is because the country’s current inflation is due to supply-push factor, not so much as demand-pull factor.
“Increase in prices of raw materials, freight charges, fertilisers, animal feed, food prices and the depreciation of Ringgit are the main contributors to inflation in our country,” he said.
He opined that increasing interest rates would not help to bring down these prices.
On the contrary, it will slow down the country’s economy and hurt businesses and the general house purchasers, he cautioned.
Chong noted that BNM’s latest report showed that Malaysia’s household debt-to-gross domestic product (GDP) ratio as at December last year was 89 per cent.
“This is extremely high if compared to other neighbouring countries in the region. As at December, 2021, Singapore’s household debt to GDP ratio was 69.7 per cent, Indonesia’s was 17.2 per cent and Philippines’ was 9.9 per cent.
“In layman’s terms, most households in Malaysia have bank loans and thus the increase in OPR means that all these families will have to pay more in their monthly installments to the banks,” he said.
He therefore called on BNM to reconsider its decision to increase the OPR.