Malaysia’s welfare system needs urgent reform, says Governor of Bank Negara | Malaysia

The Employees Provident Fund logo is seen at its headquarters in Kuala Lumpur on March 2, 2022. — Photo by Miera Zulyana

KUALA LUMPUR, March 30 – Malaysia should urgently reform its social protection system to ensure that people do not face serious financial hardship in the future, Governor of Bank Negara Malaysia (BNM) has said. ), Tan Sri Nor Shamsiah Mohd Yunus.

The governor made such a call after recent data from the Employees Provident Fund (EPF) showed that about 6.1 million EPF members have less than RM10,000 in retirement savings in their accounts. .

Among them, 3.6 million have less than RM 1,000.

“The pandemic has reminded us again that we urgently need to reform our social protection system.

“It won’t be easy, and it can’t happen overnight, but it has to start now,” she told a virtual press conference on the occasion of the release of the annual reports. from BNM today.

Nor Shamsiah said this when asked to comment on the government’s nod for a special ETH withdrawal of RM10,000 recently.

She added that now that the economy is showing signs of recovery, people should slowly start to rebuild their financial reserves.

Meanwhile, Deputy Governor Jessica Chew said while the central bank recognized the withdrawals would help many struggling to recover from the pandemic and recent flooding, the figures from ETH data “are really disturbing”.

She said it was imperative to have a policy that could provide a proportionate response to the situation the country currently finds itself in.

“Measures like this (withdrawal from the ETH) should be used sparingly, very sparingly, and only in the most extreme situations,” she said.

Meanwhile, the governor said the current ratio of household debt to gross domestic product (GDP) stood at 89%, higher than regional counterparts like Singapore (69.7%), Indonesia (17 .2%) and the Philippines (9.9%). hundred).

“We are watching high debt levels carefully,” she said.

The governor, however, felt that improvements in the planning market and targeted assistance would further support debt servicing capacity. — Bernama

Joel C. Hicks