Reduce credit card interest rates, says Datuk Donald Lim

Below is the latest news from the STAR online on credit card interest rates in Malaysia.
If Deputy Finance Minister Datuk Donald Lim Siang Chai manages to get the interest rate reduced,
this will be good news for debtors in which their debts could take longer time to reach RM30,000
- the minumum amount whereby the creditor banks can sue the debtors for bankruptcy.

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STAR ONLINE - Tuesday September 21, 2010

Reduce credit card interest rates, says Lim

PETALING JAYA: Bank Negara should consider reducing credit card interest rates instead of limiting credit cards owned by customers to two banks, said Deputy Finance Minister Datuk Donald Lim Siang Chai.

He said more input was needed before the decision could be finalised as it would stifle the rights of an individual.

“To have two is a bit subjective. The country is moving forward and we have to consider people’s rights which are getting more recognised,” he said yesterday.

Lim was asked to respond to reports that Bank Negara would be tightening credit card guidelines in an attempt to reduce household debt.

According to the reports, Bank Negara was considering increasing the required income level for credit card applications from RM18,000 to a minimum of RM24,000.

The new rule, which was expected to be announced in Budget 2011, would also see customers only being allowed to own credit cards from two banks of their choice, the reports stated.

Lim said reducing interest rates was more important than limiting credit cards.

“We are more concerned about the high interest rates which can reach up to 18%.

“A lot of people find it difficult to pay because of the high multiplying interest rates,” he said, adding that he had not seen Bank Negara’s latest proposal.

He suggested reducing the interest rates to between 8% and 10% as part of the measures to encourage more self-control spending.

“The overall outstanding credit card balance, for both prompt and overdue accounts, is about RM25.7bil and high interest rates is one of the causes,” he said.

When contacted, a Bank Negara official said they were still looking into the proposal and nothing had been finalised yet.

I met Deputy Finance Minister Datuk Donald Lim Siang Chai yesterday at a function in Kuala Lumpur.
I praised him for his efforts on proposing to Bank Negara to reduce the interest rates on credit cards.

One thing I spoke to him is to consider making it easier for genuine bankrupts to get release from bankruptcy.
He nodded his head. I hope people in this forum can write to him to petition this further so that our Budget 2011
for Malaysia is flexible for debtors and bankrupts to get reasonable chance to move forward in their financial lives, not forgetting those who have to care for their families, ageing parents, children and even high medical cost and escalating cost of living, let alone people with disablities (PWD).

I think reducing the interest rate while it's good but only solve some of the problem involving credit card. It's certainly still not help much to SME entrepreneur who had use credit card as source of funding for their new business ventures.

Have they look into the percentage of using credit card as a source of funding for new start-up and SME entrepreneur? A significant percentage of this debt could be attibuted to this, as cautiously suggested by SMI Association of Malaysia article, this couls be one of funding alternative.

When one already have problem with credit card, getting a government business loan will be also harder since most of this so call government business loan is manage by commercial bank which in return have access to all of our credit information.

If we skip the government business loan then our option will be government grant. But some of this agency who manage this grant as so concern about commercialisation rate, such impose so many pre-unwritten condition,like need to secure some client or government contract. The balancing between innovation and risk appetite, of which at the end risk appetite win, so we still have to look into our own funding.

One might say this could not happen to bumiputera since they have MARA and TEKUN. As a bumiputera, none of this agency seem to able to help. Imagine waiting 6 months to 1 year to wait for business loan. Same issues with SMECorp and let alone SME Bank.

So how can the government kill this Along business? They give money like santa clause without many restriction but deadly consequence.

Let fast forward with this if these entrepreneur or individual declared bankrupt. Talk about encouraging entreprenerial spirit under New Economic Model, when our neighbour, Singapore enable debt restructuring for individual who own $100,000 or less for debt restrucing scheme without being declared bankruptcy. Not to mentioned no automatic discharge in our current law. It's actually draconian law, even the originator of this law, whom we model this law, had change their law.

Based on those article, if a lot of our entrepreneur ran away to other countries, that is actually a total lost for our country.

It will be so easy to blame people for not spending wisely with their credit card but does they know why we use it?

It would be good to have AUTOMATIC DISCHARGE from bankruptcy after certain number of years just like what is happening in more advanced countries in the West.

It is just like after serving a certain number of years in the "jail of bankruptcy", one should be set FREE
in order for one to move forward in life rather than in some cases seeming to be like a "life bankruptcy". AUTOMATIC DISCHARGE can also bring about a more productive country towards 1Malaysia. We do NOT want to be branded by our "international judges" as a developing country with 3rd class mentality! Can we become citizens with 1st class mentality! after proudly and successfully sending one Malaysian man to the moon.

I agree with all the above responses completely.

Why does our country leave us no choice but to leave in order to escape the lifelong curse of Bankruptcy here?

Is it because as a 3rd world people, we don't deserve the enlightened Bankruptcy procedures other more advanced countries have?

I read one of the other threads about Bankruptcy laws in England where a Bankrupt is automatically discharged after 12 months. Considering England used to pack off its bankrupts to  new colonies, they have progressed.

Has Malaysia?

Hi Drew,

Has any of your friends renounced their Malaysian citizenship yet?

I heard on the Net (forums) it takes 1-2 years (used to be 2-5 years) to complete the whole process but when I called up Putrajaya and went to the relevant department in JB, I got the same answer - they told me that the whole process takes only about 3 months (if submitted in M'sia). The last step is getting back borang K from them.

Have you got your first mention yet?

@ 1818

Sorry for the delay, my friend. I'm overseas now.

None of them have got their new citizenship yet. As I told you before, the process takes years. In fact, one of my friends has just had her PR revoked. Deportation to her home country (i.e. Malaysia) is imminent, but in Malaysia she was declared a bankrupt 2 years ago.

Be aware of the risks.

No, I have not got my first mention yet. I wonder if I ever will as the banks' claims are now time-barred by the Limitation Act,1953.

Hi Drew,

I am happy for you, since it is unlikely you'll be sued now, at least won't be made a bankrupt.

May I know the reason/s your friend's PR status was revoked? Which country revoked her PR status? (If you do not feel comfortable telling me the country, just the continent will do, Europe? America? Asia?)

I do hope someone here can write a serious petition to our Deputy Finance Minister Datuk Donald Lim Siang Chai, to make a policy for our Malaysia Budget 2011 whereby all bankrupts are to receive AUTO DISCHARGE after 12 months or 18 months. This will definitely make us on par with more advanced countries in terms of making our bankrupts more productive rather than putting them in the "invisible jail for life".

Shouldn't we have 1st class mentality with our developing country Malaysia after sending our 1st Malaysia astronaunt, Datuk Dr Sheikh Muszaphar to the moon! After coming back from the moon, don't we want to see great changes to our national policies? Malaysia Boleh!

I agree with Alice Lee fully, if someone starts a petition I will sign my name on it.

People in this forum are NATO..

No Action, Talk Only..

Still no petition to Donald Duck ah?