The government’s decision to allow Employees Provident Fund (EPF) contributors to withdraw RM500 per month for 12 months to help cope with the current difficult times has drawn much criticism.
I can understand the concern and worries about the depletion of old-age savings, especially for the B40 group.
As it is, most of us cannot afford to rely on EPF savings in this day and age, where costs of living are sky-high.
Logically, the government should be putting money into the pockets of workers and not asking the workers to use their own money to prop up the economy.
But this is no ordinary time. We are facing a national health crisis that extends into all spheres of our lives, including the economy. Extraordinary times call for extraordinary measures.
The reality is that the government can ill-afford to be generous with cash handouts. Our top two money generators have been hard hit since early this year: petroleum and tourism.
The price war between Saudi Arabia and Russia has resulted in global oil prices tumbling. Our last national budget was based on oil prices at US$60 per barrel. It has been hovering around half of that in the past few weeks.
The impact on tourism is quite obvious. The industry has come to a grinding halt due to Covid-19 and the movement control order.
Hotels are at almost zero-occupancy, tourist attractions which used to be crowded, are now deserted. The spillover effects are being felt by the transportation, food and beverage as well as the cottage industry sector.
Here’s the brutal truth: the government does not have enough money to put into the pockets of Malaysians due to circumstances beyond our borders. Doing so at the expense of critical sectors like healthcare, which needs extra funding, will be reckless.
Without huge reserves, the government can only fall back on the cash pile from EPF. The RM500 may not amount to much for some, especially those from the “Bangsar bubble”. But it means a world of difference to those from the lower income groups.
When the government allows more liquidity in the market, it helps to grease the economic machinery. It may even help kickstart the economy.
If this happens, the economy can chug along again as businesses earn more and hopefully, workers’ income rise in tandem.
With luck, they may be able to replenish the money withdrawn from EPF.
Now, consider the alternative: the government does not allow workers to withdraw from their EPF, and no cash aid is given as the government could not afford it. The economy may end up in a tailspin as the vicious cycle of low consumer consumption leads to even greater prudence by workers.
Those critical of the move have not been able to offer solutions, save for cash aid which the government can ill-afford.
It’s time we move beyond politics. Let’s face the truth: the EPF withdrawal scheme is an extreme measure, for extreme times.
Johnny Lui is an FMT reader.
The views expressed are those of the author and do not necessarily reflect those of FMT.