PETALING JAYA: The massive sums of money withdrawn from member accounts in the Employees Provident Fund (EPF) will need to be rectified in the long term given how much has been withdrawn to tide people through during the pandemic.
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz (pic) said the fund outflow from the EPF and the depletion of funds in a lot of member’s accounts have become a structural issue.
“In the long term, we have to address the gap where the people need to save up for the future.
“But today, we are facing a major crisis, so we are doing all we can to assist those in need of help, ” he said.
Almost 30% of those qualified for the i-Citra programme have only less than RM5, 000 cumulatively in both of their EPF accounts.
Tengku Zafrul said that about 3.7 million EPF members have savings of less than RM5, 000, the maximum amount allowed to be withdrawn under i-Citra.
“So, they can only take out whatever (amount) is left, ” he told reporters during a virtual briefing yesterday.
Under i-Citra, EPF members can make withdrawals of up to RM5, 000 with a fixed payment rate of RM1, 000 per month for five months, subject to the member’s total EPF savings.
Up to 12.4 million EPF members below the age of 55 are expected to benefit from the i-Citra.
It is estimated that up to RM30bil would be withdrawn under this programme within the five-month period.
Tengku Zafrul said that those who have applied for the i-Sinar programme could also apply for i-Citra withdrawals.
Under the previous i-Sinar programme that allowed members to withdraw up to RM60, 000 from EPF Account 1, the provident fund has approved total withdrawals of almost RM58bil and has paid out RM50.93bil to date.
“i-Citra is just one of the many initiatives announced by the government to help those in need of help, ” he added.
Based on the experience from previous rounds of withdrawals, Tengku Zafrul said that the implementation of i-Citra is not expected to have an impact on the liquidity of the equity and bond markets.
Meanwhile, Tengku Zafrul said the latest loan moratorium announced under the RM150bil Pemulih package will be almost similar to the blanket moratorium announced last year.
The difference is, borrowers will have to opt-in or apply to benefit from the recently-announced loan moratorium.
The minister also clarified that the loan moratorium will not be interest free.
However, he announced that the banks will waive the compounded interest or the interest charged on interest accrued during the six-month moratorium period, as well as any penalty charges.
Tengku Zafrul said the latest loan moratorium is estimated to be about RM80bil and would benefit all households and businesses, regardless of their income range.
No criteria will be imposed on the borrowers.
He also added that there would be no documentation required to apply for the moratorium.
Tengku Zafrul believes that the domestic financial system will be able to manage the impact of loan repayment deferment.
“From my discussions with the banks, while they will be affected by the loan moratorium, I think they will be in the position to support given the strong capital buffers that they have, ” he said.
On a separate note, Tengku Zafrul highlighted that the government’s official economic growth forecast of between 6% to 7.5% for 2021 would be revised lower, considering the impact of the phase one of the National Recovery Plan.
“We are now studying the cost of having the current movement control order under phase one, phase two and phase three.
“Phase four may have a mitigating impact on the gross domestic product (GDP) following the introduction of the Pemulih package, ” according to him.
Tengku Zafrul, however, pointed out that the Pemulih stimulus package is expected to provide at least a 2% uplift to GDP.
With Pemulih, the minister said the government’s total expenditure for stimulus packages in 2021 has exceeded what it spent in the entire of last year.
While the latest package is forecast to cause the country’s fiscal deficit to widen to 7%, Tengku Zafrul said that Pemulih is a comprehensive package that covers all groups, especially the bottom 40% income earners and the micro, small and medium enterprises.
Several earlier initiatives to assist individuals and businesses have been improved under the Pemulih package.
The Wage Subsidy Programme (WSP) 4.0, for example, no longer has an income limit. Previously, the subsidy was limited to those earning below RM4, 000 a month.
A total of 2.5 million workers are expected to benefit from the WSP 4.0, which provides a monthly subsidy of RM600 per employee.
The programme will be valid for a period of two months in Phase 2 of the NRP. Subsequently, it will be available for another two months for sectors categorised as negative in Phase 3.
The government has allocated RM3.8bil for the WSP 4.0.
Meanwhile, under the PenjanaKerjaya 3.0 hiring incentive, the salary eligibility limit will be reduced from RM1, 500 to RM1, 200 for the “Malaysianisation” category to incentivise employers to replace foreign workers with local workers.
In addition, the employment contract period would be relaxed from 12 months to six months for employees aged 50 and above, the disabled, and ex-convicts.