BNM will examine the proposal to extend the moratorium and facilitate the process for those who really need the support

by AFIQ AZIZ / pic by RAZAK GHAZALI

BARISAN Nasional (BN) becomes the latest party to call for an extension of loan moratorium as the government sets to table the Budget 2021 tomorrow.

BN chairman Datuk Seri Dr Ahmad Zahid Hamidi said the party is requesting for Prime Minister (PM) Tan Sri Muhyiddin Yassin to extend the moratorium for another six months to those who are deserving or from the B40 (bottom 40%) and M40 (middle 40%) income groups.

“We also request for the PM to allow a withdrawal of some funds from the Employees Provident Fund’s (EPF) Account 1 savings,” Ahmad Zahid said in a statement yesterday.

He said all of BN MPs have unanimously agreed to support the upcoming budget in a meeting held on Nov 3.

Ahmad Zahid added that these requests have been submitted to Muhyiddin through a letter.

Prior to this, the Pakatan Harapan coalition had submitted its proposal for the budget, which included the extension of the loan moratorium.

Recently, unions and employees in the private sectors appealed for Putrajaya to look into mechanisms on how employees would be able to consume their savings from the EPF Account 1.

“While acknowledging that Account 1 was meant for the good old days, it must be noted that the journey towards that age is important now.

“Contributors direly need the money so that they can survive to that age,” said Malaysian Trades Union Congress deputy president Mohd Effendy Abdul Ghani.

“As such, the government must take a look at the mechanism or solve any technicality how this can be implemented,” he told The Malaysian Reserve (TMR) in a phone interview yesterday.

On top of this, Mohd Effendy also said employees are still hoping for the targeted loan moratorium to be extended for another three to six months next year.

There are more than 13.5 million workforces in Malaysia’s private sector that rely on their EPF savings.

Congress of Unions of Employees in the Public and Civil Services president Adnan Mat said the government should consider the EPF Account 1 withdrawal, which can be disbursed in stages until the Covid-19 pandemic recovers.

He recommended for a monthly withdrawal between RM300 and RM500 to help with their cashflow and spending.

According to Adnan, there are around 8,000 contract staff which have their account opened with the EPF and this move can ease their burden.

On loan moratorium, Adnan concurred with Mohd Effendy that the extension must be considered as it affects non-performing loans for the civil servants who have joint loans with their partners.

“Previously, they had two sources of incomes which could bear the household costs and pay loans commitments — especially housing loans.

“However, due to Covid-19, one may have lost the job and their household incomes are significantly reduced.

“But they still need to serve the financing, so this will be burdensome,” Adnan told TMR.

In a statement yesterday, Muhyiddin said the government has agreed to study the proposal allowing certain contributors, such as laid-off workers, to withdraw funds from the Account 1 of EPF.

“(There are) some who have contributions of less than RM1,000. Hence, EPF savings will not necessarily be able to address their cashflow problem. If they draw down, then they won’t have any savings for their future,” he said.

Muhyiddin said the government will take the approach which must balance the short-term needs of the affected individuals with their long-term future and requirements of retirement savings.

He also added that Bank Negara Malaysia (BNM) will also examine the proposal to extend the loan moratorium for another round with bank associations and facilitate the process for those who really need the support.

Last April, the government allowed contributors to use up to RM6,000 from their Account 2 with a 12-month disbursement or RM500 a month via the i-Lestari programme.

On top of this, the government had also implemented a relaxation on the EPF early this year by allowing workers’ contribution rate reduced to 7% from 11%, in which 70% of EPF members have opted for the scheme.

However, economist Dr Nungsari Ahmad Radhi said the targeted extension of loan moratorium would be preferable as it is not going to cost the government.

“The loan moratorium is useful and so far, the cost related to it has been paid by banks. This would also not be going to cost the government,” he told TMR.

Nungsari, however, said the government can take more active roles like compensating part of the losses made by banks which agreed to extend the next round of moratorium.

“The moratorium should continue for a while more and it can be more specific, like to those who have lost their jobs or those small business owners whose businesses have been affected,” he told TMR.