PM’s decision to allow EPF withdrawal amid pandemic crisis met with mixed criticisms

Prime Minister Tan Sri Muhiyiddin Yassin’s recent announcement that Malaysians aged 55 and below are allowed to withdraw up to RM 500 monthly for the next 12 months from their Employees Provident Fund (EPF) was met with mixed reactions from different sectors and individuals in the country.

Iskandar Puteri MP and DAP central committee member, Lim Kit Siang, in a statement pointed out that the prime minister should modify his proposal to allow withdrawals from EPF and instead provide cash support from the government reserves.

“The prime minister should convene an emergency meeting of the National Security Council and the cabinet to modify his proposal and instead announce the government’s provision of cash support from government reserves for Malaysians affected by the Covid-19 crisis,” he spoke out in his statement.

“The government should dig into its reserves to fund this proposal which would cost about RM 8.2 million,” he added.

PKR President, Datuk Seri Anwar Ibrahim has also urged Putrajaya to tap into the country’s reserves in order to aid those impacted by the pandemic.

The PKR president said in a live Facebook video address that the government can utilise the nation’s reserves or increase contribution from state oil and gas Petroliam Nasional Bhd (Petronas) rather than the EPF savings.

Anwar had also proposed for the government to give out a partial contribution of RM 250 while allowing EPF members to take out RM 250 instead from the accounts.

In a news report by theSundaily, the prime minister’s decision involving EPF was further met with criticism from The Malaysian Trade Union Congress (MTUC) and a similar reaction was expressed by the Malaysian Financial Planning Council (MFPC) which pointed out that such a decision could lead to opening a Pandora’s Box.

MTUC secretary-general J.Solomon was quoted saying that the EPF savings was a worker’s safety net and it would be immoral to use those savings to cope with the financial impact of the outbreak.

Additionally, MFPC deputy president Desmond Chong pointed out that such a move could backfire on those who use the money for investments.

Meanwhile, the Malaysia-China Chamber of Commerce (MCCC) and the Malaysian Islamic Chamber of Commerce (MICC) had recommended for EPF members to withdraw their 11 percent contribution to ease any financial hardship arising from the Covid-19 outbreak.

Following the PM’s announcement, Finance Minister Tengku Datuk Seri Tengku Abdul Aziz has stated the EPF contributors can apply for the i-Lestari withdrawal facility beginning April 1. He further stated that the initiative is expected to benefit an estimated 12 million EPF members, with an expected withdrawal amount of RM 40 billion.

Lau Zheng Zhou, research manager at the Institute for Democracy and Economic Affairs (IDEAS), told Business Today Malaysia that it is important to recognise the i-Lestari withdrawal scheme is but one of the measures to increase disposable household income.

He further pointed out that since it is also self-directed, only those who need it will utilise the scheme while those who do not need it will leave it as status quo.

“The responsibility falls on EPF members themselves and the government is merely facilitating it for the needy ones. After all, we can’t deny that many households may need extra income to weather this sudden shock,” Lau said.

The federal government has also received criticism following their economic stimulus package announcement by economists, Muhammed Abdul Khalid, Nungsari Ahmad Radhi, Hamdan Abdul Majeed.

All three economists had expressed their concerns in a joint letter towards the initiatives by the government amid the growing crisis.

“We were taken aback by the Treasury’s traditional balanced budget perspective as the rest of the world, especially East Asia, responds with a strong sense of urgency, recognising that this time it is different,” the joint letter stated.

“Normal considerations — of managing fiscal constraints, budgetary deficits, debt ceilings, growth targets or ratings agencies — do not apply,” all three economists highlighted.

“There must be immediate measures to put cash in the hands of those affected to sustain them through this period. The examples implemented by other governments in this regard should be considered,” the trio further added in the joint letter.

Lau however states while there are one-off payments to the tourism sector and monthly financial aid for workers forced to take unpaid leave, it is not fiscally responsible for the government to announce massive cash-handouts at this point as the country is not in a recession.

“Further monitoring is needed on the Covid-19 spread so that the Movement Control Order (MCO) can be lifted soon and businesses can operate back to normal,” Lau added.

By Poovenraj Kanagaraj

 

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