Budget That Supports Financial And Digital Literacy

By Dawn Lai, Chief Executive Officer of Experian Information Services (Malaysia)

As Malaysia heads towards its endemic phase from COVID-19, the Malaysian Government has outlined its efforts and commitment to driving an economic boost through its 2022 Budget. This will build more resilience and establish greater market-wide confidence. Despite the country’s continued bout with the prolonged pandemic and its impacts, Budget 2022 covers aspects to support more individuals, families, and businesses, making it more comprehensive and inclusive for the wider Malaysian population. The RM332.1 billion is the largest ever Malaysian Budget due to the crucial need to support the ‘Rakyat’. 

Benefiting the B40 Groups and recovery 

The B40 households stand to benefit under the “Bantuan Keluarga Malaysia” or Malaysian Family Assistance program whereby RM8.2 billion has been allocated to assist the 9.6 million lower-income Malaysians. 

Among those who will benefit include: 

  • Households with three or more children and a monthly income of less than RM2,500 will receive a one-off payment of RM2,000. 
  • Single parents or households earning less than RM5,000 each month will receive a one-time payment of RM500. Senior citizens will also receive RM300 each.

As underprivileged Malaysians have more assistance to alleviate financial burdens; it is also equally vital they are equipped with the means to manage financial matters through life. This can only be achieved through wider emphasis on financial literacy. With the right knowledge, they will be able to manage financial aid and improve their lives in a sustainable manner. This can start with the basic understanding of credit risk and their current credit standing, in order to set them on that path to achieving better credit scores. For years, Experian has been helping Malaysians to be in the know regarding their financial health. Our basic and comprehensive credit reports and monitoring subscriptions help consumers in managing their credit health. 

The urgent need for more awareness on financial literacy, debt management, and identity theft amongst the younger generation

With the government’s people-friendly policy to improve the Rakyat’s spending power, we see the “Keluarga Malaysia, Makmur Sejahtera” (A Prosperous Malaysian Family) concept is built on inclusivity as a key success factor for the nation. 

With the increased accessibility, convenience of digital lending and many facing financial difficulties, spending responsibly should be a new normal. Young adults make up over a quarter of bankruptcy cases in Malaysia, as reported by the Insolvency Department. Educating the younger generation on debt management before they enter the workforce is becoming more crucial than ever. Bank Negara Malaysia (BNM) is working to enact the Consumer Credit Act in 2022 to strengthen regulatory safeguards for all consumer credit activities, including providers of Buy Now Pay Later (BNPL) schemes to ensure that they are responsibly promoted and utilised.

In addition, the government’s initiative on cashless transactions called the e-Start programme will be introduced, benefitting youths aged 18 to 20 as well as full-time students in higher learning institutions. As reported in the news recently, there are over 500,000 PTPTN borrowers who have not made any payments which is a real concern. Student loan debt can be a stumbling block for young people as they transition into adult life. Learning good financial management skills at a young age is key to helping consumers be better at managing money. 

In this age of digital acceleration with more users coming online, it has been reported by MyCERT that from January to November this year, there were 8877 reports of fraud, vulnerabilities report, intrusion attempt, and malicious codes. This increases the potential for identity theft and will be a hotbed of cybercrimes and frauds. More awareness surrounding this is crucial to saving Malaysians from falling prey to such cybercrimes, and this outreach needs to start as early as possible.

Building SMEs’ Resilience

SMEs have been at the core of Malaysia’s economic transformation since the 1990s toward becoming an upper-middle-income nation and are important drivers of employment and growth. An overwhelming 98.5% of the 920,624 business establishments in Malaysia are small and medium enterprises (SMEs). Meanwhile, SMEs hire an estimated 7.3 million people in Malaysia, nearly half the working population. Despite being the backbone of the country’s business, digital adoption among SMEs lags behind, especially that of larger enterprises, according to the World Bank Malaysia

Despite the emerging need for a digitalised workforce, over 77% of SMEs in Malaysia still remain stagnant at the basic digitalisation stage. The lack of technological knowledge, organisational silos, and costs involved remain a barrier to digitalisation for SMEs. The budget’s focus on areas such as infrastructure and digitalisation will help in closing the digital divide and promote more digital inclusion amongst Malaysians. It is also crucial that more regulatory clarity is consistently communicated to encourage more uptake in digitalisation by firms of all sizes. Digitisation is not about new technologies alone, but it is also about business productivity. Embracing digital solutions provides a strong foundation to businesses by leveraging data and analytics. This in turn can help them transform their processes, increase customer engagement, optimise their operations, as well as build up resilience around digitalisation. 

With access to digitalisation systems, SMEs are able to adapt to the changes and future proof themselves to improve their business with the assistance of risk management in crucial aspects of debt and cash flow. 

As the country is heading towards the easing off of loan moratoriums, this will have a significant effect as the ‘Rakyat’ will need to have a stable income and sufficient savings to keep up with loan commitments. Businesses have not fully regained momentum due to the long-haul effects of the pandemic and the ongoing surge in daily COVID-19 cases, besides the new threat of the Omicron variant. An emphasis on financial and digital literacy towards not only the B40 groups but all social levels is required. Nonetheless, we are happy to see such a comprehensive coverage in Malaysia’s 2022 budget, which I believe will provide that boost to help the economy and the country recover.

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