The government will not allow withdrawals from Employees Provident Fund (EPF) as a solution to address Malaysians’ increasing debt, says Deputy Finance Minister Datuk Ahmad Maslan.
Ahmad Maslan said withdrawals for the purpose of debt settlement is against EPF’s core objective as a social security institution which provides retirement benefits for employees.
“It is against the EPF’s objectives. EPF withdrawals to settle credit card debt and also other debts will reduce the retirement savings which will definitely leave an impact to the employees in their later days,” he told the Dewan Rakyat yesterday.
Ahmad Maslan responded to Datuk Dr Nawawi Ahmad’s (Langkawi-BN) question on whether the government will approve EPF withdrawals for Malaysians who are bankrupt due to credit card debt to settle their debts.
Ahmad Maslan added the number of bankruptcies due to credit card debt is not alarming.
“The number is very small. Only about 6.6% or 1,284 individuals out of 19,575 individuals were declared bankrupt due to inefficient credit card usage in 2012.
“Meanwhile from January till March this year, it was recorded as 257 or 5.2% from 4,925 individuals who have been declared bankrupt and the numbers are reducing gradually,” he said.
He added that the household debt is at 82.9% of gross domestic product (GDP) of which 4.5% is due to credit card debt.
Malaysia’s debt-to-GDP ratio rose from 76.6% in 2011 to 82.9% as at end-March this year whereby the central bank has came out with several measures.
Among the measures are that the central bank has capped the tenure of personal loans and property loans, both residential and non-residential besides banning the offering of pre-approved personal financing products.