Sin Chew Daily

The coronavirus is taking a enormous toll on the Malaysian economy and has mercilessly exposed Malaysians' incompetency in managing their own finances.

Many economic activities have come to a halt during the MCO implemented by the government. Many self-employed individuals have to go without any income throughout this period of time.

To help the people weather the crisis, the government has introduced the i-Lestari program, allowing EPF members to draw up to RM500 a month from their second accounts for 12 months.

Response to this program has been overwhelming. As of May 3, the authorities have approved the applications of some 3.5 million EPF members. This shows that many Malaysians do not save enough for rainy days.

A Cent-GPS online survey shows that 30% of respondents have no income during the MCO, while almost 30% say their savings can only last them a month and 44% one to three months.

Many Malaysians are poor in financial management and have insufficient savings to see them through a crisis. This problem is by no means novel, and has been in existence for a very long time.

According to Financial Capability and Inclusion Study 2015, 32% of Malaysians can only cover a week's worth of expenses should they lose their source of income. The study also shows that 75% find it a challenge to even raise RM1,000 of immediate cash money for emergencies.

The study was conducted several years ago, but things have not improved much since then. Two survey reports last year have highlighted Malaysians' financial dilemma.

According to the Malaysian Financial Literacy survey 2019, 53.4% of Malaysians cannot survive for more than three months with their savings, while 43.4% spend exactly what they earn or more.

The National Strategy for Financial Literacy 2019-2023 has pointed out that 52% of Malaysians have difficulty raising RM1,000 for emergencies.

These two very different studies have come up with the same conclusion that Malaysians are not very capable in managing their finances.

Even though this problem has been around for some time, many still go on spending as usual in the absence of any major disaster triggering large-scale layoffs or rendering companies unable to operate or employees losing their jobs. The problem has not been seriously looked into by most people!

Unfortunately, the sudden emergence of "black swan" in the form of the novel coronavirus has messed up the lives of many, crudely exposing Malaysians' financial management incompetency. 

It is hoped that we all may draw some valuable lessons from this outbreak to learn to manage our finances more positively in a bid to strengthen our own financial status in preparation for the next crisis.