KUALA LUMPUR: Selling overseas investment assets by the Employees Provident Fund (EPF) and reducing domestic investments is a more suitable method to accommodate rising withdrawals by contributors.
Putra Business School economics professor Ahmed Razman Abdul Latiff said such measures that enhance liquidity need not require Bank Negara Malaysia (BNM) to create certain reserves or print more money.
Ahmed Razman was commenting on the statement by UMNO Youth chief Datuk Asyraf Wajdi Dusuki who said the EPF does not have to sell its financial assets and instead the government can direct Bank Negara Malaysia (BNM) to buy EPF assets.
“Although in general it does not impact the EPF and the people, it will burden the central bank and (such a directive) strays from the objectives of BNM,” he told Bernama.
“This seems to be a misunderstanding on the part of Asyraf.”
BNM helps the government in various ways, such as buying Malaysian bonds and giving out loans to SME Bank to help small and medium enterprises (SMEs) and providing dividends to the government, he explained.
“These measures by BNM will expand the money supply in the market. Therefore, the proposal by Asyraf for BNM to take over EPF assets will result in the same thing, that is the central bank will have to print more money,” he pointed out.
When the central bank has to print more money to take over assets from the EPF, BNM will have to take on more liabilities, he explained.
“His view that it is only an accounting entry and does not involve extra costs to BNM is not true,” he added.
The finance minister warned on Monday that EPF might have to sell more of its investment assets overseas if the government were to allow contributors another round of withdrawals from the retirement fund. Tengku Zafrul said that if the government again allowed another one-off withdrawal of RM10,000, the 6.3 million contributors eligible for this might take out an estimated RM63 billion.
The government has since allowed a special withdrawal of RM10,000 for EPF contributors, with Prime Minister Datuk Seri Ismail Sabri Yaakob making the announcement on Wednesday.
Previously in the last two years, the government also allowed EPF withdrawals through three schemes, namely i-Lestari, i-Sinar, and i-Citra, resulting in RM101 billion in withdrawals from 7.34 million contributors. – Bernama
