KUALA LUMPUR: The cut in the employees’ contributions to the Employees Provident Fund (EPF) is to boost domestic demand, said Bank Negara Malaysia (BNM) Governor, Tan Sri Dr Zeti Akhtar Aziz.
She said domestic demand has been the driver of the country’s economy during previous global slowdown and last year.
However, she said, the government had identified moderation in domestic demand and the EPF’s employee contribution reduction measures was to stimulate domestic consumption.
“What the government is doing is putting money in the hands of the consumers. This is done through this (EPF contribution reduction),” she said in a forum on ‘2016 Budget Recalibration’ here today.
Zeti said the government, however, acknowledged the importance of saving for retirement and thus the measure was only for a temporary period from March this year until December next year.
“The measure is temporary, just for this year and next year to support the economy,” she said.
In the budget recalibration announced by Prime Minister Datuk Seri Najib Tun Razak today, the government agreed to reduce the employees’ contributions to the EPF by three per cent which is expected to increase private consumption expenditure by RM8 billion a year.
The reduction, however, did not involved employers’ contributions. --Bernama