THE government is studying suggestions to allow certain contributors, such as laid-off workers, to withdraw funds from their Employees’ Provident Fund (EPF) Account 1.

“I have discussed this with the Finance Ministry, and we basically agreed and are prepared to study the proposal for contributors who really need to withdraw allocations from Account 1,” Prime Minister Muhyiddin Yassin said in Putrajaya today.

The government has already implemented measures this year related to the EPF, such as reducing the workers’ contribution rate to 7% from 11% and the i-Lestari withdrawal scheme from Account 2 of up to RM6,000 per contributor.

Almost 70% of the EPF members opted to reduce the workers’ contribution to 7%, increasing disposable income to about RM700 million per month, Muhyiddin had said in an interview with Bernama and local television stations ahead of the tabling of Budget 2021 on Friday.

More than 30% of EPF members have savings of less than RM5,000 in their accounts.

“(There are) some who have contributions of less than RM1,000. Hence, EPF savings will not necessarily be able to address their cash flow problems.

“If they draw down, then they won’t have any savings for their future,” he said.

Account 1 consists of 70% of a workers’ contribution and is specifically for retirement.

“However, the government is always ready to study the proposal to help the rakyat who are facing difficulties and truly need (the funds).”

As a responsible government, it must balance the short-term needs of affected individuals with their long-term future and requirements of retirement savings, he said.

On the call by several parties to extend the loan moratorium, Muhyiddin said the government has discussed the matter with Bank Negara and the Association of Banks in Malaysia.

“The government has received many responses on the need to extend the moratorium, especially for those affected.”

Hence, he said the government will examine the approach to facilitate the process for those in dire need of the support.

“We will study methods to facilitate the process for those who need support and will announce the decision soon,” he said, adding that consideration will be given to certain groups that are badly affected. 

He added that Malaysia is the only country that provided a blanket moratorium as part of efforts to address the impact of the Covid-19 pandemic.

“No other country took the approach taken by Malaysia by offering an automatic moratorium to all borrowers. This method has advantages in that it gives assistance to many, quickly.” 

However, this has also resulted in banks reducing funds to provide new loans.

“Thus, the government is switching to a more targeted approach.”

As at October 16, more than 650,000 applications for loan repayment assistance have been filed, comprising 603,500 individual applications, SMEs (43,000) and other businesses (3,500).

Of this, the approval rate for the applications is 98%, Muhyiddin said. – Bernama, November 4, 2020.