COMMENT | When the World Health Organisation (WHO) announced last year that Covid-19 had turned into a pandemic, many countries around the world including Malaysia decided to impose a lockdown to help control the spread of the virus.

The economic impact of a lockdown is very direct as economic activity stops, resulting in a reverse effect on economic growth. The Malaysian GDP contracted by 5.6 percent in 2020, with the biggest contraction happening in the second quarter when GDP declined by 17.1 percent.

Knowing that the impact of a lockdown could be severe for some individuals and businesses, the Malaysian banking industry decided, after discussions with Bank Negara Malaysia, to implement a six-month automatic moratorium for the consumer segment.

This was on the basis that the consumer segment was the most vulnerable and therefore should be given the opportunity to save and build up their reserves or restructure their finances.

We believed six months was a sufficient period for individuals and small businesses to prepare themselves for the long term even as the healthcare industry raced to produce a vaccine. While this was much-needed relief for those impacted by the pandemic, there were many...