“I have discussed with the finance ministry and we basically agreed and are prepared to study the proposal for contributors who really need to withdraw allocations from Account 1,” Prime Minister Muhyiddin Yassin said here, today.
The government implemented changes earlier this year with regard to EPF by reducing the workers’ contribution rate from 11% to 7% and also allowing the i-Lestari withdrawal from Account 2 of up to RM6,000 per contributor.
“Almost 70% of the EPF members had opted to reduce the workers’ contribution to 7%, thus leading to an increase in the disposable income to close to RM700 million per month,” he said in an interview with Bernama and local television stations.
He added that more than 30% of the EPF members have savings of less than RM5,000 in their accounts, hence, tapping into EPF savings may not necessarily address the cash flow problems of the contributors.
“If they draw down then they won’t have any savings for their future,” Muhyiddin said.
Account 1 consists of 70% of the workers’ contribution and is specifically for retirement.
“However, the government is always ready to study the proposal to help the rakyat who are facing difficulties and truly need (the funds).”
He added that the government must balance the short-term needs of the affected individuals with their long-term future and requirements of retirement savings.
On the call by several parties to extend the loan moratorium, Muhyiddin said the government had discussed the matter with Bank Negara Malaysia and the Association of Banks in Malaysia.
“The government has received many responses on the need to extend the loan moratorium.
“We will study on the method to facilitate the process for those who need support and will announce the decision soon,” he said, adding that consideration will be given to certain groups who are badly affected.
It is to be noted that Malaysia is the only country that provided a blanket moratorium as part of its efforts to address the impact from the Covid-19 pandemic.
“There’s no other country that took the approach taken by Malaysia by offering automatic moratorium to all borrowers. This method has advantages in that it gives assistance to many, quickly.”
However, with almost all borrowers having taken this moratorium facility, it reduced the funds for those in need while banking institutions have reduced funds to provide new loans.
“Thus, the government had switched to a more targeted approach.”
As at Oct 16, banks had received 650,000 applications for loan repayment assistance, with the vast majority being individuals (603,500). Small- and medium-sized enterprises comprised 43,000 applications while other businesses made up the remaining 3,500.
Muhyiddin said out of this figure, the approval rate on these applications was 98%.
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