Household Debt Remains Controlled Amid Government Measures
As of March 2025, total household debt stood at RM1.65 trillion, equivalent to 84.3% of Malaysia's gross domestic product (GDP), showing little change from the end of 2024. The government emphasised that household financial health must be viewed holistically, noting that household financial assets amounted to RM3.45 trillion during the same period, 2.1 times the debt level, providing a strong financial buffer.
Measures to control household debt include the Policy Document on Responsible Financing issued by Bank Negara Malaysia since 2012. This framework regulates loan approvals, including those to civil servants, ensuring borrowers' repayment capacity is assessed based on disposable income and debt service ratio (DSR) limits. Data from late 2024 indicated the median DSR of aggregate household loans remained prudent at 34%.
Specifically for civil servants, Regulation 13 under the Public Officers (Conduct and Discipline) Regulations 1993 prohibits officers from falling into serious financial indebtedness and mandates that their net monthly salary must not fall below 40% after deductions. Bankruptcy data from the Malaysian Insolvency Department recorded 4,194 cases involving civil servants from 2020 to June 2025, representing only 0.3% of the 1.6 million public sector employees.
Support services through the Credit Counselling and Debt Management Agency (AKPK), under Bank Negara Malaysia, provide financial advice and loan restructuring programmes to individuals in need. The Public Service Department (JPA) also implements strategic initiatives such as the Mind Transformation Programme (PTM) to educate new officers on personal financial management.
This statement addresses a question raised by Kuala Krai MP Abdul Latiff. The MP asked the Ministry of Finance to clarify the government's measures to address the concerning trend of rising household debt, especially among civil servants. He also inquired about the justification for financial institutions approving loans of up to RM400,000 for middle-income earners and the control measures implemented to ensure household financial stability.
The government reiterated its commitment to maintaining household financial stability through regulatory oversight and targeted support measures.
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