Speaker
Description
Nur Shahirah Azman, Minah Japang*, Yanti Ahmad Shafie, Ribed Vianneca W. Jubilee, Nurshila Ahmad, Suria Rismawati Sanwari
Correspondence Author: *mina1511@ums.edu.my**
Abstract
Malaysia’s household debt-to-GDP ratio has remained persistently high, exceeding 80% for more than a decade and ranking among the highest in Asia. While mortgage and vehicle financing continue to represent the largest components of household liabilities, recent developments in consumer credit, particularly the rapid growth of Buy Now, Pay Later (BNPL) arrangements, are altering the composition and risk profile of household indebtedness. The BNPL-based financial products have become widely available, often built right into online shopping, and fundamentally shift household credit behaviour. BNPL's nature of easy access to credit, while convenient, carries an inherent risk of encouraging impulsive buying and, over time, a subtle increase in household debt, particularly for individuals with less financial understanding. This study analyses the structural and macroeconomic determinants of household debt in Malaysia, with attention to debt-service ratio thresholds, financial fragility, and income-group disparities. It further examines the BNPL phenomenon, which accounted for over RM9 billion in transactions in the first half of 2025, with a significant uptake among younger consumers. In light of these challenges, numerous jurisdictions have initiated or proposed new regulatory frameworks for the BNPL sector. There is a consensus among policymakers regarding the necessity of integrating BNPL into the consumer credit regulatory perimeter to ensure robust consumer protection. Thus, as for Malaysia, the enactment of the Consumer Credit Act 2025 and the establishment of the Consumer Credit Commission are evaluated as policy responses aimed at enhancing affordability assessments, improving contractual transparency, and strengthening market oversight. Comparative insights from international experiences are incorporated to contextualise Malaysia’s policy trajectory. The paper concludes by outlining a research agenda that emphasises the integration of financial literacy initiatives, targeted debt management interventions, and continuous monitoring of emerging credit instruments to preserve household financial stability.
