This morning I heard from BFM that Malaysia household debt is at 83% of GDP and Bank Negara said that it is still manageable. However, what Bank Negara failed to realize is, Malaysian households do engage borrowings from non-financing institution like private lending companies (both licensed and illegal), leasing companies and many other forms of borrowing such as from family and peers, salary advances, company borrowings which are all not under the purview of Bank Negara. Coupled with the recent fuel hike, we will definitely see the CPI on the raise.

So, what does it mean? Unless the general Malaysian public puts paying off debts as the utmost priority before buying groceries, paying utilities bills and supporting kids’ education expenses, the domino effect of fuel and diesel price hike will definitely eats into the disposable income of every household, thus shrinking the real portion of household income that can be used to pay off debts.

My take on this, if BNM failed the see the big picture and have an umbrella prepared before rains, NPL will raise and banks might run into liquidity crisis. (Finger crossed!)