Economy expected to grow by 3 per cent in latest EPF withdrawal - Economist

Focus

By MUHAMMAD YUSAINY MOHAMAD YUNUS

06 Apr 2022 08:30am

Economic expert from Universiti Putra Malaysia (UPM) Putra Business School Associate Professor Dr Ahmed Razman Abdul Latiff said the country’s economic growth is expected to increase by three per cent in the next round of special withdrawals from the EPF, only if contributors spent it on basic needs.

SHAH ALAM - The next round of the Employees Provident Fund (EPF) special withdrawal is expected to increase the country’s economic growth by three per cent, if the money is being spent on basic needs.

However, economic expert from Universiti Putra Malaysia (UPM) Putra Business School Associate Professor Dr Ahmed Razman Abdul Latiff said if the money was used to pay off bank debts, it would not help in the economic growth.

“Last year, the country's gross domestic product (GDP) was around RM1.386 trillion. If RM46 billion continues to be spent on visible trade, it is equivalent to 3.3 per cent.

“However, if we refer to the EPF statistics, 16 per cent of withdrawals are made to pay off debts.

“It means that maybe around RM38 billion will be used for daily needs and this money will go to the local economy.

"This will increase the GDP by around 2.7 per cent, this year," he said when contacted by Sinar Harian.

On March 29, EPF said in a statement that the payment for the special withdrawal to eligible contributors would be made on April 20.

EPF members including non-citizens and permanent residents who are aged 55 and below with a minimum savings of at least RM150 can make the withdrawals.

Meanwhile, Ahmed Razman also estimated that more than six million contributors will be withdrawing their EPF contributions this time.

According to him, this will involve withdrawals of between RM46 billion to RM48 billion, close to half of the RM101 billion previously issued under the i-Sinar, i-Lestari and i-Citra schemes.

“A total of 6.6 million contributors will have savings of less than RM10,000 after this withdrawal, 4.1 million of whom will only have savings of less than RM1,000.

"Five million Bumiputera contributors (representing 62 per cent of Bumiputera contributors) will have savings of less than RM10,000 after this," he said.

Commenting further, he said most of the contributors who will be making the withdrawals were those who have savings of more than RM10,000.

This was because contributors who have lesser savings could not expect such benefits as their savings were too little.

"A total of 25 per cent of contributors will find that they have to work an extra five years or more to cover the amount of the money that have been withdrawn," he said.

Meanwhile, Ahmed Razman said he was also of the opinion that the EPF has sufficient liquidity to cover the RM46 billion to RM48 billion withdrawal, but it may have to sell its investment assets overseas.