KUALA LUMPUR: The Employees' Provident Fund (EPF) can use the contribution money in the agency as collateral to banks to convince banking institutions to help subscribers facing financial problems including debts, said an economic expert.

According to the expert concerned, it is one of the alternatives that can be taken by EPF, apart from allowing the subscribers to withdraw their contributions, as implemented by the government before.

An economist at University College i-CATS Kuching, Professor Datuk Dr Shazali Abu Mansor said for that purpose, the government would need to discuss with the banks.

"If the government can instruct the banks to help those with debt problems, it would be better because the strict regulations of some banks are making it difficult for the people, and the banks should know that the cause of the problem is due to the COVID-19 pandemic and not by the people.

"By making savings in the EPF as collateral, it will help the subscribers, who can also use the collateral period as a time for them to rebuild their finances," he said when contacted by Bernama today.

He said that the government through Bank Negara (BNM) should also give priority to looking after the welfare of borrowers and not just after the interests of bank institutions.

"Where the rules can be relaxed, it should be relaxed, such as allowing customers who are in the Central Credit Reference Information System (CCRIS) or blacklisted to make loan structuring or flexible repayment based on their ability financial ability. This is the problem facing most entrepreneurs," he said.

Sharing Shazali's thoughts is a senior lecturer at the Department of Finance, School of Economic Studies, Universiti Utara Malaysia (UUM), Dr Adilah Azhari.

She said EPF could also reduce the contribution rate so that subscribers had more money to use to pay debts and other basic needs.

"The proposed reduction in contribution cuts can be carried out in a few months, for example for 12 months and this will give the people room to solve their financial problems because the contribution is mandatory.

"For example, for those with an accumulated contribution of less than RM10,000, it may be possible to reduce their contribution rate to as low as 4.5 percent, while those with more than RM10,000 to eight percent," she said.

Meanwhile, an economic analyst at the UniKL Business School, Associate Professor Dr Aimi Zulhazmi Abdul Rashid said that if the EPF withdrawal was to be allowed again, it should be directly credited to the bank to settle outstanding debts or adjust loan payments to avoid bankruptcy.

"It can also be made through the Credit Counseling and Management Agency (AKPK), specifically to those with bank debt ... if can be done, will give a new lease of life to those affected," she said.

Another economic analyst, Putra Business School (PBS) MBA Programme director, Associate Professor Dr Ahmed Razman Abdul Latiff advised the public to continue to practice prudent spending by spending within their means, and not make new debt.

"Always improve your skills and knowledge to be able to get a job that promises a higher salary, and if you need help, don't hesitate to get help from those who can help.

"Those with problems can also get the services of AKPK to help with their financial management and participate in upskilling and reskilling programmes to improve their quality of life," he said.

--BERNAMA