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PM defends EPF collateral proposal, which does not contradict the act

Rosli Mansor

IPOH: The government has defended its move to allow members of the Employees’ Provident Fund (EPF) to use their contributions as collateral for personal loans because the move does not conflict with the 1991 EPF Act.

The Prime Minister, Datuk Seri Anwar Ibrahim, said the matter had been discussed and refined with the EPF before the method was announced by him in the Dewan Rakyat, last Thursday.

He explained that the permission for contributors to use EPF savings as bank collateral is for those who have a large contribution but are facing difficulties.

“We don’t allow people to withdraw EPF contributions anymore because this is not the time of COVID-19 anymore, they can work, but there are some urgent cases that need to be reported to us.

“For example, he has money, but can’t pay for his children’s education fees abroad and we don’t really release the EPF, so he can use that method but with strict conditions,” he said when met after officiating World Water Day (HAS) 2023 at the Indera Mulia Stadium, today.

Anwar, who is also a Member of Parliament for Tambun, insisted that his speech in the Dewan Rakyat regarding the method of using EPF contributions as bank collateral needs to be examined before any party issues an opinion.

“It’s normal (some parties are not satisfied with the method), if you follow me, they won’t give any more (EPF withdrawals), but there are some urgent cases that need to be considered.

“There are cases where we see it as reasonable because he (the contributor) may have a lot of money in the EPF so we can allow it (to become bank collateral),” he said.

Last Thursday, Anwar announced that the government would introduce a method that would allow EPF contributors to use the money contributed to the agency as collateral to banks for financial financing purposes.

He said the method can be offered to any EPF contributor who is ‘desperate’ to obtain financing with collateral from the agency involved.

However, allegations arose saying that allowing EPF contributions to be used as collateral, violates the law according to the EPF Act 1991 as the savings can only be withdrawn for specific purposes.

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