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‘Soft loan to hide federal debt’

‘Soft loan to hide federal debt’

PR MPs accuse govt of abusing EPF for political motives
Tuesday, February 7, 2012 – 17:00
by Hamzah Nazari

DAP national publicity secretary Tony Pua

PKR vicepresident Nurul Izzah Anwar

KUALA LUMPUR: Pakatan Rakyat is claiming the Employees Provident Fund (EPF) had been “abused” for giving out soft housing loans to the urban poor instead of getting direct government aid.

In a joint statement, the opposition coalition’s PKR vicepresident Nurul Izzah Anwar and DAP national publicity secretary Tony Pua claimed it was also a Treasury’s attempt to avoid adding to the federal debt.

They were responding to Federal Territories and Urban Well-being Minister Datuk Raja Nong Chik Zainal Abidin’s announcement the EPF would extend RM1.5 billion in special purchasing loans to thousands of low income families.

Nurul Izzah, the Lembah Pantai MP, and Pua, the Petaling Jaya Utara MP, said: “What appears to be a routine and noble scheme to assist the poor who are unable to secure bank financing to buy low-cost housing units has stirred controversy over how EPF is being abused by the federal government for political motives.”

They said under normal circumstances, any federal welfare programmes would be funded through its tax revenues.

“In the event tax revenues prove insufficient, the federal government may issue bonds to raise money to finance its deficit expenditure.”

Both MPs found it “extremely odd” as EPF would be extending the RM1.5 billion house loans directly to those who failed to secure commercial loans to buy houses.

“The diff erence between the two approaches is that the federal government is considered a low-risk borrower and, hence, contributions by Malaysian workers to the EPF are considered safe, while loans to those who failed to obtain commercial housing loans are considered high-risk borrowers.”

Nurul Izzah and Pua concluded the government did not want to increase its debt by borrowing directly fromEPF, but “instead passed the buck to EPF to lend directly to the low-cost housing purchasers because the government does not want to further increase its much criticised and already high debt levels.”

According to them, the federal debt has reached RM456 billion as at the end of last year, which is a 88.4 per cent increase from RM242 billion fi ve years ago, in 2006.

Both MPs instead suggested the government could alternatively use the national mortgage corporation and leading securitisation house, Cagamas Berhad, to enable banks to extend more housing loans or repeat the 2008 federal-established funds for those without fi xed income to buy low-and medium-cost housing.

© Copyright 2012 Malay Mail Sdn. Bhd.
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