KUALA LUMPUR — 53,000 people under the age of 30 owe nearly RM1.9 billion in cumulative debt, according to the Credit Counselling and Debt Management Agency (AKPK).
Finance Minister II Datuk Seri Amir Hamzah Azizan said AKPK also found that 28% of Malaysian working adults have borrowed money to purchase essential goods.
“The growing accessibility of personal loans, credit cards, and especially ‘Buy Now, Pay Later’ schemes is particularly worrying, especially among young adults.
“While these tools may offer convenience, a lack of understanding of their implications and a lack of discipline in managing commitments can quickly lead to unmanageable debt,” he said during the launching remarks for Financial Literacy Month 2024 today.
Amir Hamzah also cited the Organisation for Economic Cooperation and Development (OECD) financial literacy survey, which found that only 36% of Malaysians understand basic financial concepts such as interest rates, inflation and risk diversification.
This figure falls below the global average of 42%, positioning Malaysia 26th out of 39 countries surveyed.
The low level of financial literacy is concerning, particularly given Malaysia’s high household debt.
He added that as of 2023, household debt had reached RM1.53 trillion, equivalent to 84.2% of gross domestic product, one of the highest ratios in the region.
“This alarming figure indicates that households are increasingly relying on credit to finance their lifestyles and investments.
“If not carefully managed, such levels of debt can lead to long-term financial strain, reinforcing the critical role that financial literacy plays in safeguarding financial health,” he said.
Amir Hamzah highlighted that financial literacy is fundamental to the economic empowerment and financial well-being of all Malaysians, making it a central pillar of the Madani economic framework.
“The government, through the Financial Education Network, has prioritised financial literacy as a core element of its policy agenda under the National Strategy for Financial Literacy 2019-2023.
“This strategy aims to develop responsible financial habits, enhance financial planning and build financial resilience among Malaysians,” he said. — October 1, 2024