MONTHLY allowances for a year are a better way to help the B40 and M40 income groups instead of allowing withdrawals from their Employees’ Provident Fund (EPF) savings, said DM Analytics managing director Dr Muhammed Abdul Khalid.

“It is the responsibility of the government to help the people when they are suffering. Monthly aid should be given to the B40 and M40 groups.

“This is not a new thing as it is being done in Japan and Singapore. Provide them with the assistance for a year,” said Muhammed, who was economic adviser to former prime minister Dr Mahathir Mohamad.

He was speaking to The Malaysian Insight on the Insight Talk show.

Muhammed said the scheme to allow EPF withdrawals for those whose incomes have been affected by the Covid-19 pandemic is badly thought out.

The scheme “misses the point” for those who need assistance, whereby many who are experiencing severe financial stress are those in the informal sector, where EPF contributions are not mandatory but voluntary.

“EPF has nothing to do with them although they are undergoing the most pressure,” he said.

“So, who are we trying to help? If we want to help those who have lost their jobs or are subjected to pay cuts, they should instead be given cash assistance.”

The i-Sinar scheme was introduced in Budget 2021’s original version targeting EPF contributors who have lost jobs, allowing them to withdraw RM500 per month at a maximum of RM6,000 for 12 months.

Various political parties, however, demanded that the withdrawal limit be increased.

The scheme has been amended and expanded to cover eight million contributors to include those who also took salary cuts. They can access 10% of their Account 1 funds from January.

The maximum amount that can be taken or advanced in the first withdrawal has been raised to RM10,000, with the balance of the remaining 10% staggered over six months.

The tapping of EPF funds meant for retirement has been criticised as a reflection of the government’s poor handling of slow wage growth and high living costs.

Budget 2021 also proposed a reduction of workers’ statutory contribution to the EPF to 9% from 11%, in order to leave contributors with a higher disposable income.

Muhammed also said the government had “misplaced priorities” allocating bonuses for the civil service, ministries and setting aside funds for the propaganda unit, the Special Affairs Department (Jasa), which is being rebranded as the Community Communications Department.

“Why give civil servants bonus? Civil servants have not lost their jobs nor are they subjected to pay cuts.

“It is better if this (allocation) is given to those who lost their jobs and are working in the informal sector.

“It is not a matter of lack of funds but the allocation is not right.”

Overall, he said, Budget 2021, at RM322.5 billion, and the RM305 billion economic stimulus packages launched by the government earlier this year to mitigate the pandemic’s impact on the economy, fail to help the needy.

There are no new forms of assistance, as cash aid has already become a staple provision since it was introduced by the Najib Razak government as Bantuan Rakyat 1Malaysia (BR1M).

“This aid was channelled from 2012 to 2019 and there was no crisis at that point.

“When there is a crisis, additional aid and new forms of assistance should be given. But there is no additional aid next year.” – December 2, 2020.