by ASILA JALIL / pic by TMR FILE

MANY people are urging the government to allow the withdrawal of RM10,000 from the Employees Provident Fund (EPF) and voiced support for the repayment term under Bank Simpanan Nasional (BSN) for flood victims.

These proposals, however, could affect the victims both positively and negatively in the long term, especially with regards to the withdrawal from their retirement coffers.

The government had recently slashed the idea of allowing flood victims to withdraw from their EPF accounts under the i-Citra scheme.

This announcement drew criticisms mainly from Umno leaders themselves who had called on Prime Minister (PM) Datuk Seri Ismail Sabri Yaakob to give the green light for withdrawals as a way to support flood victims.

Agreeing with the PM, Putra Business School Assoc Prof Dr Ahmed Razman Abdul Latiff opined that the EPF withdrawal will not help flood victims because not all of them are contributors to the fund.

He added that statistics have also shown that only around 50% or 6.1 million of contributors have savings less than RM10,000.

“Therefore, I would prefer that assistance to the flood victims should be comprehensive, covering all victims, regardless whether they are EPF contributors or not.

“This kind of assistance should come directly from the government and possibly from NGOs and the private sector,” he told The Malaysian Reserve (TMR) yesterday.

He added that if the current contributors have utilised the previous i-Sinar, i-Citra and i-Lestari schemes, they would have withdrawn a maximum of RM21,000 from their retirement fund.

With that amount of withdrawals made within two years, Ahmed Razman said the people would have to work an additional four to six years to recover the amount.

“By allowing another RM10,000 withdrawal, (this) will affect their ability to retire comfortably and lengthen their year of employment.”

On the other hand, UniKL Business School economic analyst Prof Dr Aimi Zulhazmi Abdul Rashid told TMR that many are still reeling from the closure of economic activities and job retrenchments due to the pandemic.

He said businesses — mainly micro, small and medium enterprises — are still trying to get back on their feet as they are faced with a lack of manpower due to employers’ inability to pay the salary while restarting their businesses.

“Obviously those affected by floods in the Klang Valley, Johor, Pahang and Melaka were just about to recover from the Movement Control Order and certainly will need all the help to rebuild their lives back on track,” he said, adding that it is appropriate for the government to approve the EPF withdrawal.

Previously, Ismail Sabri stated that the government has no plans to allow those hit by floods to make withdrawals from the EPF because there are many forms of financial aid offered to individuals and businesses to recover from the floods.

Umno’s Datuk Seri Dr Ahmad Zahid Hamidi and Datuk Seri Mohd Najib Razak were among those who want the EPF withdrawals to be cleared by the PM.

Meanwhile, Opposition leader Datuk Seri Anwar Ibrahim urged the government to immediately channel financial aids amounting between RM5,000 and RM10,000, if it does not allow further withdrawals from the EPF.

BSN has also provided an interest-free personal financing facility of up to RM10,000 to flood victims, compared to the previous RM5,000.

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said RM100 million is allocated for this purpose and the six-month moratorium on monthly instalment is available to flood victims nationwide.

Ahmed Razman opined that the repayment terms will assist flood victims in rebuilding their homes and businesses immediately, but would only be beneficial if they did not have any existing financial obligation with the financial institution.

“If they have an existing financial obligation, once the moratorium ends, they will have to pay both the existing loan as well as the new loan given. This will put an additional burden to them.

“What the financial institution should do is to forgive the existing debt. If not the whole amount, maybe the interest portion of it.”

He added that on average, banks registered a profit of between RM2 billion and RM3 billion every year, and banks should be able to allocate the debt jubilee as part of their corporate social responsibility programme.

“If one bank has 1,000 borrowers who are affected by the flood and the debt jubilee was RM10,000 per borrower, the bank only has to bear the cost of RM100 million under this corporate social responsibility initiative, which is only 3% of their total profit,” he said.

Aimi Zulhazmi said the BSN loans should be flexible, especially in terms of legal documentation which may have been lost or damaged during the floods.

“Nonetheless, those who are working on their own may have trouble to provide the documentation, thus the standard operating procedures must be relooked for this aspect.”

He added that besides the six-month moratorium, the government can subsidise the loans from BSN, such as interest-free loans for at least two years as this will enable borrowers to rebuild their lives after the floods and the pandemic.

“Extended period of financing will be a good help and transfer the loan to the children when they are able to start working later.”