KUALA LUMPUR, March 20— Young Malaysian graduates, especially those who kick off their working lives in the major cities, usually face tough obstacles in terms of sustaining their daily costs of living.
The average monthly salary of fresh graduates, mainly degree holders, is only around RM3,000 and for diploma holders lower.
With the current house prices, which are appreciating, it is impossible for the young graduates to own houses in the Klang Valley and other major cities.
The house values in these areas are over 100 times the monthly income of a fresh degree holder.
Thus, more graduates have opted for depreciating assets, including cars and motorcycles, to fulfil their desires to own assets.
Associate Professor Dr Mohd Eskandar Shah Mohd Rasid said this trend was unhealthy for the graduates, especially in their long-term financial journey.
The International Centre for Education in Islamic Finance (INCEIF) School of Graduate Studies deputy dean, said the government, as the regulator, may need to find a solution to help these graduates own something that would help them move up in the value chain as the time goes by.
By purchasing only the depreciating assets, he said, it would be harder for them to improve their standards of living in the future.
“One thing the government can do is to look at subsidising the purchase of properties as we are currently subsidising quite a lot in terms of (other) consumption.
“Maybe the savings that we have from removing all these subsidies can be channelled into subsidising property purchases because it s so important for the young graduates to own something (appreciating assets) in the country and build up their life,” he told Bernama.
By allowing graduates to own a house at a subsidised price for a start, Mohd Eskandar said, it would eventually help them in their long-term financial journey, as well as moving away from debt-based society to ownership society.
“Another way the government can do is maybe to make the car prices more competitive, which in turn could free up some of their financing to make them available to purchase a house,” he said.
Mohd Eskandar said a study on housing subsidy was needed.
“There must be a mechanism so that only the right group of people would benefit from the incentive.
“We have to undertake the study. If you do not do it properly then the people can also abuse the subsidy. We don t want that to happen,” he said.
Mohd Eskandar also suggested the government adopt the Singapore Housing and Development Board model, which, in a way, provided subsidy for its people in purchasing houses.
“By allowing people to own the appreciating assets, it would allow them (in the future) to move into better houses. Rather than setting the standard (house price) too high, we should allow the people to own something first.
“Without taking the first step, they will not be able to move to higher step,” he said.
Meanwhile, Mohd Eskandar said, INCEIF was concerned the saving rate among Malaysians was going down, and that they were borrowing a lot.
“It is not a good sign of sustainable economy. We need to change that. Maybe the reason people are not saving is that they are not getting the value for their savings,” he said.
He said this is where Islamic finance could play the role.
“When you follow the Islamic finance value, which is more of risk sharing, you take higher risk to get a higher return. And if the banking system can provide better value for the investments rather than looking at the customers as depositors but investors and give better value, they might encourage more people to save,” he said.
The scholar said creating wealth was important in Islamic finance, as well as channelling wealth through zakat and waqaf.