Are Malaysians shopping their way into debt? Data shows BNPL use, personal loan-taking on the rise

KUALA LUMPUR, March 24 — Malaysians just can’t stop spending it seems, at least according to official data.

For 2024, the Malaysian economy grew 5.1 per cent, surpassing initial estimates as exports rebounded and people kept buying. But so did household debt, which grew to a staggering RM1.63 trillion, or close to 85 per cent of GDP.

So is this a sign that households are doing better? Or was much of that spending financed by debt?

Two useful proxies that may provide a clue are personal loan and credit data because they are mostly debt taken on to finance household consumption.

Personal loans have stacked up significantly since 2006.

In January 2007, total personal loans taken were just RM762 million. By January this year, it had grown to RM8.82 billion, according to data provided by data.gov.my.

Bank Negara Malaysia described personal loans as debt usually taken to fund home renovation and weddings but survey findings in the past showed that among the top two reasons people take on personal loans is for “emergency” and “debt consolidation”, meaning they take on more debt to repay existing debt.

Over the last few months high indebtedness among civil servants became a hot button topic, following a report that showed more of them going bankrupt.

Personal loans were found to be the top factor causing the rise in insolvency among public sector workers.