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Buy now, pay later: A convenient trap for young Malaysians
Buy now, pay later: A convenient trap for young Malaysians

The Sun

time5 hours ago

  • Business
  • The Sun

Buy now, pay later: A convenient trap for young Malaysians

USING the 'buy now, pay later' (BNPL) scheme for the first time felt harmless. Just three easy payments for a pair of shoes that were not really necessary. It seemed like a smart move at the time – no interest, no hassle and no guilt. But that mindset is exactly what gets so many young people into trouble. From 2020 to 2025, more than 5,189 Malaysians under the age of 34 were declared bankrupt. Most of them were between 25 and 34, an age group that should be building their financial future. This is not just a statistic; it reflects a growing reality for many young adults trying to manage life's expenses with limited income and increasing pressure to spend. With BNPL so widely available and heavily promoted, it is no surprise that more people are relying on it. The recent Consumer Credit Bill passed in Parliament shows how urgent the problem has become. The new law introduces the Consumer Credit Commission to oversee BNPL and other non-bank credit providers. It is a step in the right direction but the fact that it is even needed speaks volumes. BNPL is appealing because it feels light at first. No upfront payments, offers interest-free instalments and fast approval. But the catch comes later, quietly. Miss one instalment and there is a penalty. Miss a few and the debt will grow without warning. Penalties between RM10 and RM50 may not sound like much until they keep stacking up. It becomes easy to lose track of how many items are being paid off. What began with one small item turns into four or five ongoing commitments. BNPL encourages impulse decisions. The thought process is no longer 'can I afford this' but 'can I split this'. Bank Negara reported that most BNPL users earn below RM3,000 a month. For many, even one missed payment affects rent, food or transport. BNPL has helped some low-income families afford essentials, like baby formula and groceries, especially during difficult times. That is understandable but it should not become the default way to survive. In the first half of 2025 alone, Malaysians spent RM9.3 billion through BNPL, of which RM121 million is overdue, and the numbers are not slowing down. What is worrying is how normalised it has become. They are not only used for emergencies or needs but also for clothes, gadgets and online shopping sprees. These habits can lead to debt that may seem manageable but can become overwhelming over time. Therefore, regulation helps. However, awareness matters more. Many still do not grasp the risks they are taking. Educational institutions should teach students on money management. Financial literacy is a skill that needs to be taught and cultivated early, not learned after it has become a problem. BNPL is not an enemy but without control, it can turn into a cycle that will be hard to break. The best solution is to have self-discipline before it is too late. Darren Ong Wei Shen is a student at City University Malaysia. Comments: letters@

FBM KLCI ends at intraday low as cautious sentiment weighs on market
FBM KLCI ends at intraday low as cautious sentiment weighs on market

The Star

timea day ago

  • Business
  • The Star

FBM KLCI ends at intraday low as cautious sentiment weighs on market

KUALA LUMPUR: The FBM KLCI closed at its intraday low on Tuesday amid cautious sentiment driven by ongoing trade talks and a downward revision of the gross domestic product (GDP) growth forecast. The FBM KLCI closed at its intraday low of 1,523.82, down 5.56 points or 0.36%, after reaching a high of 1,537.62 earlier in the day. Stocks that fell outnumbered those that rose 603 to 365, with another 506 counters unchanged. A total of 3.36 billion shares changed hands, worth RM2.2bil. Dealers expect the cautious sentiment on the local bourse to persist, weighed down by lingering uncertainties surrounding the ongoing US-Malaysia trade negotiations as the deadline approaches. This, along with Bank Negara's downward revision of the GDP growth forecast, is likely to keep sentiment subdued. Among the decliners on Bursa Malaysia, Panasonic Manufacturing slid 36 sen to RM10.52, Kuala Lumpur Kepong lost 28 sen to RM19.52, Nestle fell 20 sen to RM87.80 and PETRONAS Gas declined 14 sen to RM17.78. Allianz jumped 40 sen to RM17.70, British American Tobacco added 32 sen to RM4.89, PETRONAS Dagangan gained 26 sen to RM21.70 and PETRONAS Chemicals climbed 18 sen to RM3.79. ACE Market debutant Oxford Innotech jumped 32.76%, or 9.5 sen, to 38.5 sen with 101.55 million shares traded. Meanwhile, stock market data showed that foreign investors sold a net RM103mil on Monday. Local institutions and retailers were net buyers, with RM67mil and RM37mil, respectively. On the forex market, the ringgit was down 0.09% against the greenback at 4.2347. It rose 0.46% against the pound to 5.6497, and 0.13% against the Singapore dollar at 3.2901. On the external front, major regional indexes ended mixed, with Japan's Nikkei 225 closing down 0.79% and Hong Kong's Hang Seng slipping 0.15%. South Korea's Kospi rose 0.66%, while China's CSI 300 Index climbed 0.39% and the Shanghai Composite Index added 0.33%.

Bank Negara lowers growth forecast
Bank Negara lowers growth forecast

The Star

timea day ago

  • Business
  • The Star

Bank Negara lowers growth forecast

PETALING JAYA: Bank Negara believes the Malaysian economy is facing external headwinds from a 'position of strength', as it announces a new gross domestic product (GDP) growth forecast of between 4% to 4.8% for Malaysia. The latest projection is a fractional downgrade from between 4.5% to 5.5% previously, although the central bank emphasised that latest indicators, including advanced estimates for the second quarter growth, continue to point towards sustained strength in economic activity. While marginal, the lower forecast is nonetheless noticeable, in the context of global growth outlook that is being affected by shifting trade policies and uncertainties surrounding tariff developments. Furthermore, the renewed projection has also led economists to chorus that it is crucially vital for Malaysia to secure a beneficial tariff position with the United States before Aug 1, in light of what Vietnam and Indonesia have done, to reinstate the former's more favourable trade position. In a statement released yesterday, Bank Negara stressed that resilient domestic demand will continue to support growth going forward, as decent labour market conditions, particularly in domestic-oriented sectors, and policy measures will continue to underpin private consumption. The central bank acknowledged that the updated growth projections account for various tariff scenarios, ranging from a continued elevation of tariffs to better trade negotiation outcomes. 'This forecast remains subject to uncertainties surrounding the global economy, both on the downside and upside,' it said. Senior economist at United Overseas Bank (UOB) Julia Goh perceives that the central bank's new position on Malaysia's growth prospects is the impact of a prolonged uncertainty surrounding the tariff situation. She said Bank Negara has also taken into account the slower growth trajectory that is seen in the first half of 2025 (1H25) and projected moderation in 2H25. 'We continue to see scope for a potential 25 basis points (bps) overnight policy rate (OPR) cut in 4Q25, though it will depend on the extent of downside risks from trade and slower export demand, as well as effects of domestic policy reforms and fiscal expansionary measures in the upcoming budget,' she told StarBiz. Professor of economics at Sunway University, Dr Yeah Kim Leng, recognises that weakening global demand has softened Malaysia's external outlook, reducing earlier expectations of stronger contribution from external trade and foreign investment to Malaysia's growth. Nevertheless, he noted that domestic consumption and investment, coupled with higher government spending are expected to underpin Malaysia's GDP for 2025, before adding that the GDP growth of 4% to 4.8%, if realised, is still commendable in light to the strong headwinds facing the global economy amid geopolitical turbulence and trade war uncertainties. Together with a better than expected 4Q25 GDP out-turn of 4.5% amid low inflation, Yeah reckons Bank Negara is in a comfortable position to provide the necessary financial and monetary conditions to support continuing growth as well as ensure a conducive environment to anchor structural reforms that will further strengthen consumer and investor confidence. Asean economist at HSBC, Yun Liu, opined this downward revision of GDP growth forecast for this year from Bank Negara is largely expected, and the magnitude of the adjustment is not as significant as other regional peers. Seeing the glass as half full, she views GDP growth in 1H25 to be 'decent', before commenting that while a large part was thanks to front-loading trade activities before the higher levies come into effect, other sectors, particularly services, had remained robust. Of interest, and in variance from Goh's stance, Liu said despite growth being the primary concern in Bank Negara's reaction function, she believes the 25bps rate cut in July by the central bank is a one-off insurance cut to pre-empt possible negative spillovers to the economy, and not to open the door for easing. 'We do not expect another rate cut in this easing cycle, although a lot would depend on the trade negotiations ahead of the Aug 1 deadline. 'It is not only about the absolute tariff level Malaysia faces, but also about the relative tariff rate between Malaysia and regional competitors,' she told StarBiz. Doris Liew, an economist specialising in South-East Asian development, concurs that Malaysia's trade performance has been partly affected by global tariff tensions and supply chain uncertainties, particularly involving the United States. In response to these concerns, she observed that some exporters have front-loaded shipments to the United States, a trend that may taper off in 2H25. Liew said: 'However, growth in 1H25 has remained moderate, staying below 4.5%, and is noticeably slower than the same period last year. 'This suggests that front-loading alone has not significantly bolstered economic performance, and a subsequent slowdown in export activity could weigh further on overall growth momentum.' She cautioned that the United States remains a critical trade partner, accounting for around 20% of Malaysia's exports, and as such, preserving lower tariff access is thus important for maintaining Malaysia's comparative advantage in key sectors. 'If global trade headwinds persist, further monetary policy easing may be on the horizon. With inflation remaining relatively stable, Bank Negara retains policy space to support growth through rate cuts without stoking inflationary risks,' Liew pointed out. While economist Geoffrey Williams also believes that the growth downgrade by Bank Negara has been widely signalled, he suspects that that GDP growth will be closer to 4%, down by at least 1% year-on-year. 'This is mostly due to tariffs. Although total trade and exports have been strong, it is net trade that matters for growth and this has been squeezed very much by front-loading and volatility due to the delayed tariff negotiations,' he said. Like Liew, Williams thinks it is essential for Malaysia to secure a good tariff deal to remain competitive against other countries such as Vietnam and Indonesia. The economist estimated the impact of a less-than-favourable tariff deal would result in a growth decline of 1%, or RM20bil, and Malaysia should do its best to avoid such an outcome, as this would be the cost of protecting Malaysian markets, or maintaining bumiputra preferences for example. 'The OPR cut should keep growth within the new forecast range so there is no need for further cuts,' said Williams, in agreement with HSBC's Liu. Separately, Bank Negara governor Datuk Seri Abdul Rasheed Ghaffour said the country's economy remains resilient despite global uncertainties, which is in part, the outcome of structural reforms that the central bank has undertaken over the years. 'The sustained strength in economic activity and moderate inflation provides a supportive environment to pursue structural reforms for a more resilient and competitive Malaysia in the future,' he said.

Malaysia cuts growth forecast on tariff volatility
Malaysia cuts growth forecast on tariff volatility

Straits Times

time2 days ago

  • Business
  • Straits Times

Malaysia cuts growth forecast on tariff volatility

Bank Negara Malaysia now sees the economy expanding by 4 per cent to 4.8 per cent, lower than its previous forecast of 4.5 per cent to 5.5 per cent. KUALA LUMPUR - Malaysia's central bank lowered its growth projection for 2025 as it contends with the fallout from US President Donald Trump's tariffs. Bank Negara Malaysia now sees the economy expanding within the range of 4 per cent to 4.8 per cent, lower than its previous forecast of 4.5 per cent to 5.5 per cent. It also trimmed its inflation forecast this year to 1.5 per cent to 2.3 per cent, from 2 per cent to 3.5 per cent, amid a moderation in cost and demand outlook. 'The updated growth projections account for various tariff scenarios, ranging from a continued elevation of tariffs to more favourable trade negotiation outcomes,' Bank Negara said in a statement on July 28. 'This forecast remains subject to uncertainties surrounding the global economy, both on the downside and upside.' Favourable trade negotiation outcomes, pro-growth policies in major economies, continued demand for electrical and electronic goods, and robust tourism activity could raise Malaysia's export and growth prospects, it added. The revised forecast comes as Malaysia seeks to lower US tariffs to less than 20 per cent, after Mr Trump increased a threatened levy on the South-east Asian country to 25 per cent. The country has until Aug 1 to conclude negotiations, and is optimistic of reaching a deal. Bank Negara said Malaysia is facing external headwinds from a position of strength, pointing to resilience in the economy based on advanced estimates in the second quarter. Domestic demand will continue to support growth going forward, it said. Top stories Swipe. Select. Stay informed. Singapore Tanjong Katong sinkhole backfilled; road to be repaved after LTA tests Singapore MRT platform screen doors at 15 underground stations to undergo renewal Singapore 'Medium risk' of severe haze as higher agricultural prices drive deforestation: S'pore researchers Singapore Jail for former pre-school teacher who tripped toddler repeatedly, causing child to bleed from nose Singapore Police statements by doctor in fake vaccine case involving Iris Koh allowed in court: Judge Singapore Authorities say access to Changi intertidal areas unaffected by reclamation, in response to petition Singapore SMRT reports unauthorised post on its X account, says investigation under way Singapore No change to SIA flights between S'pore and Cambodia, S'pore and Thailand, amid border dispute Inflationary pressure from global commodity prices is expected to remain limited, contributing to moderate domestic cost conditions, the central bank said. The impact of local policy measures is also likely to remain contained, it added. BLOOMBERG

The RM2.5b giveaway that Malaysia can't afford
The RM2.5b giveaway that Malaysia can't afford

Malaysiakini

time2 days ago

  • Business
  • Malaysiakini

The RM2.5b giveaway that Malaysia can't afford

COMMENT | When Prime Minister Anwar Ibrahim delivered his 'Penghargaan Untuk Rakyat' speech on 23 July 2025, he painted a confident picture of Malaysia's economic trajectory. Growth stood at 4.4 percent for the first quarter of 2025, with expectations of 4.5 percent in the second. The ringgit had strengthened against the US dollar, climbing to RM4.23/US$. Malaysia rose by 11 spots to 23rd place in the World Competitiveness Index, and total approved investments reached a record RM384 billion last year. However, beyond the headline figures lies a more complex and fragile reality. Analysts have pointed out that Q1 growth underperformed market expectations. Exports remain uneven. Domestic consumption is cooling, and Bank Negara's recent rate cut reflects the underlying weakness that persists despite upbeat official messaging. If this is truly a period of recovery, it should have been...

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