KUALA LUMPUR (April 1): The unconditional withdrawals under the Employees Provident Fund’s (EPF) i-Sinar facility is expected to provide an immediate positive impact to the economy in terms of consumption, said Bank Negara Malaysia (BNM) deputy governor Datuk Abdul Rasheed Ghaffour.

Rasheed, however, stressed the need to boost the public’s retirement savings, especially in terms of building a financial buffer after the retirement savings has been utilised.

“Labour market reform is important and by ensuring that people would have better jobs, better income and can save further to enhance and increase their retirement savings.

“Reform measures in terms of social protection reform are also important, particularly the social insurance part. In terms of private retirement schemes, this will help strengthen further with regard to build up of retirement schemes,” he said at an event organised by the Malaysian Economic Association.  

Concurring with Rasheed’s view on the impact of i-Sinar on the domestic economy, MIDF head of research Imran Yusof said in terms of impact on the financial market, the EPF as one of the major big players in the equity market has sufficient liquidity to support the market.

“They (EPF) have a very diversified portfolio in terms of investment — they have fixed income, stock market, properties,” he said.

Imran added that with additional money in the public’s pocket now through i-Sinar withdrawal, active retail participation in the local equity market could be seen again this year.

“With the spare cash, either they consume or they invest, we have seen the trend of retail participation come in a big way last year and it seems like the trend is going to stay for this year,” he said.

The Securities Commission Malaysia, in its latest annual report, noted that retail investors have pumped in a total of RM14.3 billion into the stock market in 2020.

Meanwhile, Amundi Malaysia chief investment officer for fixed income Eridani Tutiana Jusat said although the i-Sinar withdrawal impact is positive for the local economy, she remains cautious over its impact on the domestic bond market.

“We are a bit cautious because EPF is a big investor in Malaysian government bonds. If there is less support from the EPF on the bond market, this will weigh on the market.

“So we are watching, every month, on how much withdrawals are being made,” she said.

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz has said that as of March 14, i-Sinar withdrawals of RM52.48 billion had been approved for 5.94 million applicants.

Of that amount, a total of RM32.74 billion had been credited, he said.

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