Prime Minister Datuk Seri Anwar Ibrahim speaks during the World Water Day 2023 celebrations at Stadium Indera Mulia in Ipoh March 11, 2023. ― Picture by Farhan Najib

The Malaysian government has taken a step to assist its citizens who are struggling financially due to the ongoing COVID-19 pandemic. The government has approved the use of savings in Employees Provident Fund (EPF) Account 2 as collateral for bank loans. EPF is a savings institution set up in Malaysia to aid employees in saving for retirement. The funds contributed by employees are meant to be used for retirement purposes only, and it is mandatory for Malaysian employees to contribute a portion of their salary to EPF.

However, the financial strain caused by the pandemic has led to many Malaysians facing difficulties in meeting their financial obligations, including repaying loans. As a result, some Malaysians have been advocating for the withdrawal of EPF funds to help them through these trying times.

The Malaysian government has responded by allowing EPF Account 2 savings to be used as collateral for personal bank loans, which can be an effective way for EPF contributors who need cash to get the financial assistance they require without touching their retirement savings. It is worth noting that the use of EPF savings as collateral for bank loans is not a new concept, and it has been implemented in several countries globally.

However, the Prime Minister has emphasized that EPF is meant for retirement savings, and he does not support the withdrawal of these funds, particularly since Malaysians have already been allowed to make several EPF withdrawals in the past, resulting in a decline in their retirement savings. Furthermore, Anwar Ibrahim reminded the public that several countries, including Australia, Peru, and Chile, have stopped special withdrawals from their retirement savings.

It is essential to note that the Deputy Finance Minister Datuk Seri Ahmad Maslan revealed that the median savings in the EPF accounts for all Malaysians dropped 50% to RM8,100 last year from RM16,600 the year before the pandemic. This highlights the significance of the government’s decision to allow EPF Account 2 savings to be used as collateral for bank loans, as this could be a lifeline for many Malaysians during these financially challenging times.

In conclusion, the decision of the Malaysian government to permit the use of EPF Account 2 savings as collateral for bank loans is a crucial step in aiding its citizens during these trying times. The use of retirement savings for other purposes can lead to long-term financial difficulties for individuals, and the government’s move to allow the use of EPF Account 2 savings as collateral is a more responsible and sensible approach to addressing the financial hardships faced by many Malaysians.