Developers: Rethink EPF withdrawal mechanism

Posted on | September 13, 2007

By BUSINESS TIMES

PROPERTY developers have urged the government to reconsider the proposed mechanism of crediting monthly Employees’ Provident Fund withdrawals for housing purposes to contributors’ individual accounts.

“The repercussion of such a mechanism is huge and in the end, it may not benefit the contributors and the economy,” Real Estate and Housing Developers’ Association Malaysia (Rehda) president Ng Seing Liong said in a statement yesterday.

From January, EPF contributors who want to make monthly withdrawals from Account 2 to help pay their housing loan instalments need only go once to apply for it.

The money will be directly credited to their personal accounts .

“While ideally (EPF) contributors should self-regulate in issues related to finances, the temptation of having extra money to spend may lead them to buy other things or commit to new loans,”said Ng.

He added that although domestic spending was generated, the withdrawals would not help in mitigating the high cost of home ownership.

“If the withdrawals are intended to help them reduce their loan or enhance their housing loan eligibility, the mechanism should be designed to serve such purposes.”

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