According to a report by the Star Online, Khazanah Research Institute’s fourth publication of “The State of Households II”, noted that most household debt was undertaken to finance house purchases, where housing loans have expanded by 11% between 2014 and 2015.

The report mainly noted that the ratio of household debt to gross domestic product remains high, at 89.1% in 2015 against 87.4% in 2014.

“There is a concern that many will not have saved enough for a 20-year retirement and are taking on too much debt,” said Khazanah Research Institute Managing Director Charon Mokhzani.

In comparison, the notoriously low United States household savings rate is much higher at 5%, compared with the Malaysian 1.4% of adjusted disposable income in 2013, which averaged at 1.6% for 2006–2013.

“Save for Japan, Malaysia’s household savings rate as a percentage of adjusted disposable income in 2013 was the lowest among a selection of countries for which this data is publicly available,” Charon added.

The Khazanah report also noted that only 10.8% of households in Malaysia were resilient to financial shocks.

More than a fifth of the households surveyed would only be able to survive for less than three months if their incomes were cut off.

More than half these households did not have any savings, the report said.

Khazanah’s previous “State of Households” report had proposed several measures to reform household debt.

The proposals include requiring all providers of consumer credit to prominently advertise the true annual percentage rates, realigning the regulation of consumer credit between the various government agencies currently in charge, and mandating the teaching of basic financial literacy in schools.

“To date, these proposals have yet to be implemented,” it said.

However, the report also said the overall household balance sheet is still healthy, with households continuing to accumulate more financial assets than debt.