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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 were 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 involve employers’ contributions.
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