Friday 29 Mar 2024
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KUALA LUMPUR (April 25): Malaysians considering withdrawing their savings to meet their need for cash now given the harsh economic conditions caused by the Covid-19 outbreak, should not forget their future needs too, says EPF chief executive officer Tunku Alizakri Alias.

Alizakri said EPF members' need to tap into their retirement savings now is understandable, given the trying times. Nonetheless, he reminded them that it is important to strike the right balance between their current needs and the needs of their future retirement. 

“We are all facing a very difficult period currently, and therefore our contributors will have to find the correct balance of withdrawing enough from their EPF savings to address present challenges while ensuring they also have enough for the future.

“We must have hope and remember that all crises end eventually,” he told theedgemarkets.com, adding that he is also saddened by the challenges that EPF members and Malaysians are currently facing as a result of the Covid-10 outbreak.

During an interview with Astro Awani last Wednesday (April 22), he highlighted some worrying findings from the fund’s data, which showed the low level of savings among EPF members.

The data showed that 71.4% of self-employed members have less than one month’s worth of savings in their EPF accounts, while 82.7% of private sector employees have only saved enough to support themselves for less than two months.

He explained that the surge in applications for the i-Lestari initiative -- which allows contributors to withdraw RM500 per month for 12 months from their Account 2 -- is mainly due to the fact that it was introduced prior to the government’s unveiling of the PRIHATIN stimulus package.

The Ministry of Finance last week said that some 1.5 million i-Lestari applicants were approved as at April 17, out of a total 2.8 million applications.

Since then, however, Alizakri said that the government has offered various forms of financial assistance including the moratorium on bank loans, suspension of insurance and takaful premium, as well as discounts on electricity bills, which should help in addressing the burden faced by Malaysians.

Besides that, he also urged SMEs to take advantage of the assistance provided by the government, noting that there are currently about 480,000 SMEs registered with EPF, which are providing jobs for seven million Malaysians.

“We did some analysis and found that with the impact of the MCO (Movement Control Order), if even 1% of our SMEs fail, more than 60,000 jobs will be lost. This will also translate to a 0.6% impact to Malaysia’s GDP,” said Alizakri.

During the interview, he said that the Covid-19 pandemic came at a time when the global economy was already on an unstable footing, given issues such as the US-China trade war, Brexit, as well as the cut in US interest rates, which triggered cuts in policy rates by other central banks around the world

Malaysia was also affected by the banning of palm oil in Europe and more recently the plunge in crude oil prices, he said.

He said that the Covid-19 outbreak had a multiplier effect on the already unstable global economy, adding that the current global crisis will be three to five times worse than the Global Financial Crisis in 2008, adding that it could be worse than the Great Depression in the 1930s.
 

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