ECONOMIC experts are divided over an online campaign designed to pressure the government to again give approval to contributors to dip into their Employees Provident Fund (EPF) savings to help them tide over rising cost of living.

Since its launch two weeks ago by social media practitioner Faiq Naqib, the campaign has to date collected more than 170,000 signatures.

Among the “aye” sayers to allow people withdraw from their savings is financial consultant Wong Chai Soon who argued that if people can’t survive today, “then there’s no point talking about retirement”.

“If we talk about life’s security after retirement, we really shouldn’t open up the EPF for withdrawals. But if they can’t survive now, then there’s no tomorrow for them.”

Wong said the appeal for the withdrawal to cope with inflationary pressures and rising food prices this time is “slightly more sensible” than those in the past.

He was referring to the i-Lestari and i-Sinar schemes that the government introduced in April last year to assist contributors tide over the economic and financial woes they faced as a result of the Covid-19 epidemic by allowing them to make withdrawals from their EPF savings.

The i-Lestari withdrawal scheme involved account 2, whereas i-Sinar was for account 1 withdrawals.

i-Lestari allowed members to withdraw up to RM500 per month for a total of 12 months while in the i-Sinar withdrawals, they could withdraw up to RM10,000.

In July the same year, the government re-introduced the i-Citra scheme, which allowed members to withdraw deposits of up to RM5,000.

However, Wong said if the government is seriously considering opening up again, he suggested a tightening of the application requirements and approval on a case-by-case basis to ensure that only deserving cases can make the withdrawal.

Another aye sayer, economist Phua Lee Kerk said to ensure there would be enough funds left for the contributors to use in retirement, the government should consider having a two-pronged approach on the withdrawal by implementing a policy that allows employers to raise the salaries of their employees.

Phua said the government could consider giving employers tax breaks, “otherwise a pay raise demand could end in layoffs”.

Time to spend less

On the flip side of the argument, Universiti Tunku Abdul Rahman economist Wong Chin Yoong said the government allowing another round of EPF withdrawal would actually exacerbate the inflation as people have more spending power.

He described it as “having no end to opening a gaping hole”.

Wong, who fears the government will accede to these demands in order to please voters with the general election looming, asked if inflation is an emergency that would allow EPF members to draw on their savings.

“I don’t think so,” he said.

“(To me) an emergency is when you no longer have the means to generate any income. It should also be a national problem, not a transitional situation.”

He then asked if they knew how long the inflation period would be.

“How long do they need to make the withdrawal?

“If they are from the low-income group, then their account could be depleted in under a month.

“The inflation problem might persist.”

“So that’s not the right way to solve the inflationary pressure of life,” Wong said.

He said to tackle the rising prices and inflation that comes with it is to have a change in lifestyle and do a little belt tightening.

“Do some savings. Just think of savings as a kind of consumption. If you have 10 things to buy, then one of your 10 things should include savings.”

Wong Chai Soon, who is also against making further premature EPF withdrawals, agreed with Chin Yoong when he said hard times need hard decisions like spending less and saving more.

“If you used to drink milk tea, time to consider drinking cheaper tea or just not spend time outside and make your tea at home.”

He said these days, many people could not tell the difference between needs and wants.

Chin Yoong meanwhile said if the government buckles to the pressure and allows another round of withdrawals, “it will exacerbate the inflation problem”.

He said currently the two major causes of the inflation and rising food prices the country is experiencing was that the supply chain could not match the pace of recovery of the economy that had reopened after the epidemic and the second is the Russia-Ukraine war.

He also pointed out the reason why Bank Negara had hiked the interest rate.

“It’s to prevent inflation due to excess demand. If the EPF withdrawals are approved, the impact is that unregulated spending and the amount of money entering the market will create more demand and inflation.” – July 15, 2022.