Malaysia Launches The National Strategy For Financial Literacy
The National Strategy for Financial Literacy 2019 – 2023 was launched by Prime Minister Tun Dr Mahathir Mohamad today. It was formulated by the Financial Education Network (FENetwork), an inter-agency group led by Bank Negara Malaysia and the Securities Commission Malaysia.
The strategy sets out priorities and actionable plans to help Malaysians make informed financial decisions.
The five-year roadmap aims to elevate the financial literacy of Malaysians in all life stages – from school children to retirees. This will involve expanding financial education into pre-school, primary and secondary school curricula, among other measures. For more information about its priorities and action plans, access the National Strategy report here.
Why does this matter?
Malaysians generally have a hard time with saving and budgeting. According to statistics published by FENetwork, around 1 in 3 Malaysians admit to having low confidence when it comes to financial knowledge. Although 76% of Malaysians have a budget, 2 in 5 find it difficult to keep to it. Around 1 in 5 working adults have not saved in the past six months. Most (84%) Malaysians who do save regularly only do so for the short-term – these savings are typically withdrawn at the end of the month.
This makes it hard for many Malaysians to face unexpected life events. Around half (52%) of Malaysians find it difficult to raise RM1,000 as emergency funds. Worryingly, only a quarter (24%) are able to sustain living expenses for at least three months if they lose their main source of income.
This is where the National Strategy comes in. It aims to improve the financial well-being of Malaysians by elevating financial literacy – this, in turn, could help Malaysians make informed financial decisions to improve their standard of living.
The National Strategy will complement the new Credit Consumer Act
Tun Dr Mahathir said that the government will also expedite the creation of a new law that will protect consumer’s interests and encourage a healthy credit market. The Consumer Credit Act, which will be tabled in Parliament this year, will help credit users receive fair treatment when dealing with creditors.
He pointed out that Malaysia’s household debt stands at 82.1% of its gross domestic product (GDP). This is higher than other higher income nations, such as Italy (40.3%), Japan (58.1%) and the United States (76.3%).
“There are signs of difficulty in repaying loans, especially among those earning less than RM5,000 monthly and are living in urban areas,” he said.
He noted that about 80% of those who participated in debt management programmes with the Credit Counselling and Debt Management Agency (AKPK) were overly optimistic about their ability to repay their debts.
“Therefore, it is important to increase financial literacy among the people, and the formation of the new consumer credit law will strengthen the protection framework for credit consumers in the country,” said Tun Dr Mahathir.