ONE cannot imagine being in a difficult situation to make ends meet during this time of crisis.

The immediate need of many low-income families, especially parents who just lost their jobs, requires the attention of government and society at large. Help is needed to support the basic necessities for survival. This is the example given by the prime minister when he described the targeted group that could withdraw from their EPF account 1 savings.

While it is not surprising given that account 2 was also allowed to be withdrawn earlier under the i-Lestari program, the time period between them is rather short. This means that the savings is depleted at a faster rate than it is invested to generate dividend and higher income. As a consequence, the position of EPF members who exercise this option will be worse-off in the short-term due to the higher financial “opportunity cost” in dividend that they have to foregone.

However, many proponents of this policy argue that the most important matter to be addressed now is creating the social safety net for the B40s. This is a long-term view to ensure that they are supported through the recession period and well-positioned to recover when the worst is over. From the macroeconomics perspective, this and other measures introduced by EPF so far would indirectly increase domestic spending and revitalise the economy. The latest GDP growth projection under Budget 2021 is between 6.5% and 7.5%, where around 60% is expected to be contributed by domestic consumption.

As with other government initiatives announced in Budget 2021, execution will be key to success. The government plans to open the withdrawal option only to 600,000 EPF members who need it the most. Compared to the current unemployment figure of around 800,000, this seems sensible. To improve success rate, EPF should also explore using big data analytics to identify members that need help. This includes B40 members from worst-hit industries, such as aviation, tourism and retail; parents who have no source of income to cater for their children and left with Account 1 as the last option; members with enough minimum savings even with the withdrawal cap of RM 500 per month to ensure they have some funds left for retirement.      

The withdrawal will be in the form of cash, hence it should come with spending guidelines as a reminder that it should be used to cover basic needs and not our wants. Excessive spending behaviour and living beyond our means through easy access to credit and personal loans need to change. Our society should reflect and return to fundamental principles of being content and grateful of what we have as well as willingness to help others.     

We are in challenging times and many are desperate for help. The government has presented their proposal, which includes the biggest budget in our country’s history. We too must respond to the crisis with a positive mind, along with an adequate financial plan. Lesson from this crisis will make us stronger. It is in our hands. – November 9, 2020.      

* Akmal Ab Wahab reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.