Making travel plans: Shoppers looking at luggage at Berjaya Times Square shopping mall in Kuala Lumpur after EPF allowed consumers to withdraw from their Akaun Fleksibel. — AZMAN GHANI/The Star
PETALING JAYA: The recent withdrawal flexibility of the Employees Provident Fund’s (EPF) Akaun Fleksibel (Account 3 – flexible), which has put more cash into consumers’ wallets, is driving increased consumption, according to industry players.
With more disposable income, some consumers are indulging in discretionary spending while others choose to focus on what is essential.
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Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) deputy president Datuk Ng Yih Pyng said the creation of Account 3 has been of great help to many.
“The withdrawal will enable them to make up for whatever is lacking, especially in household expenses,” he said in an interview yesterday.
On April 25, EPF members were allowed to make withdrawals of a minimum amount of RM50 from Account 3, or “Akaun Fleksibel”, at any time for any purpose.
For retail businesses and the fast-moving consumer goods industry, Ng said the withdrawals would stimulate consumption and boost sales.
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“This presents a positive opportunity for market players, as business operators can capitalise on consumer mood,” he added.
Ng, who is also a Federation of Goldsmiths and Jewellers Association of Malaysia advisor, said the buying trend following the withdrawals varied across different industries.
“In the jewellery sector, the trend is closely linked to seasonal patterns. Indian jewellers, however, may witness a surge in sales during the wedding season now, showcasing a temporary uptick in purchasing behaviour,” he said.
However, Ng said the current momentum after the Account 3 withdrawals still had some way to go before reaching peak season activity, with the festive period and school holidays having drawn to a close.
“Typically, from the mid-year period until after the coming Hungry Ghost month, there is a noticeable decline in gold and jewellery purchases, suggesting a seasonal slowdown in consumer demand within this specific market segment,” he said.
Ng added that the full market impact of the Account 3 withdrawals will likely become clearer in the fourth quarter of the year, especially as the festive season approaches.
Datuk Ameer Ali Mydin, who is Mydin hypermarket’s managing director, said there had been an increase in consumer spending of between 15% and 20% at his outlets after the government gave the green light to withdraw funds from the Akaun Fleksibel.
While this was a good trend, he said the government needed to look at other ways to help boost public savings.
“Perhaps the government can consider increasing the minimum statutory contribution rate for employees to 15%. This will allow people to save more money for their retirement,” he said.
SME Association of Malaysia secretary-general Chin Chee Seong said the association welcomed the EPF’s Akaun Fleksibel withdrawals.
“However, most SMEs believe that the current withdrawals are mainly from the middle income (M40) group, not the Bottom 40 (B40) income group.
“The B40 group often lacks sufficient savings in EPF to make such withdrawals,” said Chin.
“This withdrawal will likely benefit mainly Top 20 (T20) income earners and some (M40) consumers, who may use the funds to invest in higher-return investments or repay existing debts, thereby reducing financial costs.
“It’s unlikely that they will spend these funds on luxury or non-essential items. The majority will use it to cope with the increased cost of living and cover any shortfalls,” he said.
Chin felt that although there was a slight increase in consumer spending, it could only be temporary.
“The withdrawals will likely not have a long-term economic impact because they’re not substantial enough to drive significant economic growth.
“Moreover, there may be some concerns about lowered retirement savings for individuals, which could result in increased financial instability in the future.
“The government must continue its efforts to reduce the cost of living and, crucially, the cost of doing business for SMEs,” he added.
A Malaysia Retail Chain Association (MRCA) spokesperson concurred, saying that the EPF withdrawals from the Akaun Fleksibel appeared to be a short-gap measure to spur consumer spending.
He added that this may not be sustainable in the long term due to the limited resources and the effect of the government’s subsidy rationalisation efforts.
