Putrajaya should inject cash directly into the pockets of citizens through an expanded stimulus package instead of depleting their retirement savings in the Employees Provident Fund (EPF), said analysts.
Contributors should not tap their own funds that are meant for retirement, resulting in large dividend losses, they said.
“We need a safety net for individuals, families and businesses,” said Wong Chin Huat of the Jeffrey Cheah Institute on Southeast Asia.
“Without such a safety net, the movement-control order won’t work or many will be laid off afterwards.”
An MCO is currently in effect until March 31. People are barred from leaving their homes except to buy food and essential items or for medical emergencies.
Prime Minister Muhyiddin Yassin said the government may consider extending the containment period as Malaysia deals with a rising number of infections and deaths daily.
Yesterday, he said EPF contributors will be allowed to make withdrawals of up to RM500 a month for a maximum 12 months from Account 2. Applications will start on April 1.
“We have to accept this cruel fact: some of us will die and we – that is, everyone in the economy – will be poorer together, and the poor must get support from the government now, with the cost to be covered by higher tax on everyone later,” said Wong.
“You can’t expect retirees to survive on an extra RM500 per month. The government needs to provide welfare benefit for the poor. The movement control order cannot work if people starve.
“Symbolically, ministers and deputies should take pay and allowance cuts for money to go to the poor,” he added.
The Malaysian Trades Union Congress in an immediate reaction after Muhyiddin’s announcement yesterday urged Putrajaya to scrap the move and to have the “moral courage” to use government reserves to help citizens without depleting their retirement savings.
James Chin, director of the Asia Institute at the University of Tasmania said the government is essentially trying to deal with one problem by creating another one in the future.
“EPF contributors with smaller deposits will have their accounts depleted sooner. When they really retire, there may be very little left.
“What the government is doing is transferring the problem to the future, which is not a good idea. Giving direct cash to the bottom 40% of household income earners (B40) is a better idea.”
Chin suggested that the government expand its stimulus package to small and medium enterprises (SMEs) to cover wage and other costs.
“However, the private sector consists of mostly non-Malays.
“Malays make up most of the government-linked companies and the civil service, so this is a test whether the new Perikatan Nasional government is really a government for all Malaysians,” Chin added.
Universiti Malaya (UM) socio-political analyst Awang Azman Awang Pawi said the government appears to have ignored the plight of the poorest of the poor: non-EPF contributors.
“Those without any EPF are sidelined and have no opportunity to receive such aid. It will be extremely challenging for them to survive.
“muhyiddin’s announcement appears to be a desperate measure, signalling that the government may lack the funds to face this crisis.”
Awang Azam said the new government must be more creative.
“Whatever reserves must be used to kick-start the economy. One way is to encourage spending,” he said, adding that this can be done by cash injections to workers.
Putrajaya will unveil a more comprehensive economic stimulus package to cover small businesses and lower-income earners on March 30. – TMI