Malaysians crowdfund to help cut national debt

Malaysians crowdfund to help cut national debt

Malaysians have resorted to an unorthodox way of raising money to pay off their country’s debt – crowdfunding.

Feeling buoyant after the first change in government since independence, Malaysians gave nearly $2m in the 24 hours after authorities announced a fund would be set up to raise cash.

Malaysia has a multi-billion-dollar debt pile.

It sparked a social media debate about whether other countries should follow.

The government initiative came after a 27-year-old Malaysian, who is “very much in love and proud” of her country, set up private fundraising effort that attracted interest.

“The rakyat (people) voluntarily want to share their earnings with the government to help ease the burden,” said Finance Minister Lim Guan Eng, as he announced the fund to provide a “systematic and transparent” platform for contribution. He gave bank details where Malaysians can deposit their donations.

The fund raised 7m Malaysian ringgit ($1.8m; £1.3m), within the first day of its existence, a spokesperson at the finance ministry told the BBC, but was not able to give the overall amount to date.

The move is reminiscent of the late 1990s when South Koreans queued to donate wedding rings and other valuables to help their struggling economy amid Asia’s financial crisis.

Malaysia’s new government, led by Prime Minister Mahathir Mohamad, who achieved a shock victory last month, has said it is committed to tackling the country’s debt burden.

The government has said its current debt and liabilities stand at more than 1tr Malaysian ringgit ($251bn; £189bn) – about 80% of economic output.

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The new prime minister has said he believes most of the money missing in a notorious corruption scandal, which contributed to his predecessor’s shock defeat, can be returned.

US-based Twitter users were quick to draw parallels. The US national debt passed $20tn last year.

“With the US deficit ballooning, I wonder how long before we try this.” commented one person.

But analysts said the move was unlikely to have much of an impact.

“It’s very unlikely given the scale of debt we are looking at in Malaysia,” said Krystal Tan, Asian economist at Capital Economics. “There is a very long way to go.”

Source: BBC News

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