RM10k special EPF withdrawal provides much needed financial cushion, improves economic outlook for Malaysians
SHAH ALAM - The Special Withdrawal Facility of up to RM10,000 by the Employee Provident Fund (EPF) will positively impact the economic outlook for Malaysians, according to economists.
The funds will likely provide a much needed financial buffer to many households coupled with the reopening of all economic sectors as the country slowly transition into the endemic phase since April 1.
Deputy Director of Research at Khazanah Research Institute (KRI) Hawati Abdul Hamid said recent data shows EPF members utilising the special withdrawal facility have shown a priority in eliminating existing debts.
“It is highlighted that the purpose of applying the special withdrawal facility is to finance daily and monthly essential expenditures (40 per cent) and to settle outstanding debts (26 per cent).
“However, when compared to the scenario during i-Citra, we can see a sharp drop in the reason for daily expenditure which stood at 62 per cent back then and now down to 40 per cent.
“We can also see an increase in the reason to settle outstanding debts to 26 per cent, which was only 16 per cent under i-Citra. Meanwhile, there is also a noticeable shift in the reasons for applying where the loss of job or income has fallen from 63 per cent under i-Citra to 46 per cent,” she told Sinar Daily.
Recently, the EPF announced it has received over 5.3 million applications under the Special Withdrawal facility to withdraw a total of RM40.1 billion as of April 14.
This is the fourth special withdrawal facility allowed by the EPF since the pandemic began.
The previous three special withdrawals from the EPF, namely i-Lestari, i-Sinar and i-Citra have benefitted 7.34 million members or 58 per cent of 12.6 million members under 55 years old, with total withdrawals amounted to RM101 billion.
However, Hawati said there is no guarantee that the special withdrawal of this nature will not happen in the future when another crisis hits the economy, especially when members again pressed EPF to have access to their own retirement funds.
“As Malaysia is set to be an ageing population by 2045, income security during old age will be even more challenging for many,” she said.
Commenting further, she said the government should continue to ensure that the economy could quickly recover from the negative consequences of the pandemic as the recovery of small and medium enterprises could help create more job opportunities.
“As the cost-of-living issue is a challenge to many Malaysians, containing the inflationary pressure on necessities goods such as food and transport cost is necessary to help alleviate the force to allow for another withdrawal,” she added.
Meanwhile, an associate professor at Putra Business School Dr. Ahmed Razman said the statistics on the latest EPF withdrawal scheme indicated that there has been a gradual shift in terms of reasons and purposes for withdrawal.
“One noticeable trend is that the majority of the applicants no longer lose their income or job and they intend to use the withdrawn cash more towards daily and essential expenditures as well as for settling debt,” he told Sinar Daily.
However, he said he saw that another trend is emerging where 23 per cent of the members said they wanted to withdraw the cash to assist affected spouses and family members.
Generally, Razman said the outlook is improving where people are starting to get their income and jobs back despite many among the B40 and M40 groups still in need of assistance from various parties.
“Only 8 per cent of the applicants applied for a withdrawal of less than RM1,000, meaning that this withdrawal scheme did not really help the bottom group of B40, as they no longer have enough cash in their EPF account,” he said.
