Malay households are overspending despite earning more, says the Association of Muslim Professionals (AMP).
Their household debt is a cause for concern, even though it has not reached alarming levels, said Mr Azmoon Ahmad, chairman of the AMP yesterday.
Although Malay households accounts are generally in the green, AMP observed that families are spending more money than their income gains.
AMP says that the median income for Malays has risen from $2,709 in 2000 to $3,844 in 2010.
However, spending has become “entrenched… even in times of financial difficulties, households may not revert to initial levels of consumption”.
For example, 83 per cent said they would not unsubscribe from their cable television services in bad times.
Other panellists at the forum said overspending due to lifestyle preferences is the most common cause of debt.
Mr Azmoon said: “Higher expenditure could be supported by purchases made on credit, thus increasing the liabilities.”
He said that debt was not only restricted to lower income families, but PMETs too.
National University of Singapore economist Sumit Agarwal, also a panellist, cited a graph showing that Malays have the highest credit card debt although they have the smallest credit card spending compared with other races.
Moneylenders, both licensed and unlicensed, also contribute to the problem because they do not offer stringent safeguards like those of banks, the panellists said. They suggested that more financial literacy camps be conducted.
Mufti Mohamed Fatris Bakaram, Singapore’s top Muslim religious leader, urged prudence when the panel sought his comments. “It is an ethical issue of behaviour, attitude and self-responsibility of trying your best to limit borrowing only for necessities – not for lavish purposes – and the commitment of paying it back.”