KUALA LUMPUR, Mar 14 — Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz today said that the Employees Provident Fund’s (EPF) 6.1 per cent dividend for conventional savings for 2021 could have been 6.7 per cent if previous unprecedented Covid-19-related withdrawals were not allowed.

He said this also meant that RM5.4 billion in terms of additional dividend could have been distributed among EPF members.

"Actually, I never said this previously, that without the withdrawals, dividend rates for EPF conventional savings for 2021 supposedly could touch 6.7 per cent compared to 6.1 per cent which was announced recently.

"The loss of the RM5.4 billion (dividend) has resulted in 5.3 million EPF members who previously did not make any withdrawals via any withdrawal schemes, have to receive low dividend rates,” Zafrul told the Dewan Rakyat today.

Zafrul was referring to EPF withdrawals via three programmes namely i-Lestari, i-Sinar and i-Citra, which saw 7.3 million members or 58 per cent of 12.7 million members withdraw an amount of RM101 billion ringgit.

He questioned MPs who are still urging the government to allow another final EPF withdrawal on whether this was fair.

"I would like to ask the YBs, who also represent contributors who do not need to make any withdrawal from their savings, is this fair?” he said.

Zafrul pointed out that if another one-off RM10,000 withdrawal was allowed, the number of members eligible to make the withdrawal is expected to hit 6.3 million members.

"This will likely involve an additional withdrawal of more than RM63 billion.

"If additional withdrawals are allowed, the EPF is required to implement portfolio balancing, and the impact could possibly be more than the withdrawal value of RM63 billion,” he said.

Opposition Leader Datuk Seri Anwar Ibrahim was among those who urged the government to allow withdrawals from the EPF, seeking immediate approvals and without any hindrances and bureaucracy.

Anwar reportedly changed his tune after receiving feedback from people who are struggling to get by.

However, Zafrul warned that to make available a withdrawal value of RM63 billion, the EPF needed to sell more investment assets overseas in current volatile market conditions.

"Especially with the recent Russia-Ukraine conflict, (they have) stopped investment in the country (Malaysia) for a short period (three to six months),” he said.

He added that if this continued, it would have a negative impact on both local stock markets and bonds.

"I have not said this before and must be said, that some of the possible adverse effects and among them have happened to the local bond market including Malaysian Government Securities’ (MGS) interest rates which have increased at an average rate of 100 basis points compared to the third quarter of 2020.

"This resulted in the government’s future borrowing cost significantly increased and deterioration of market participants’ portfolio,” he said.

He also said that this would continue to increase the negative sentiment of market participants towards local financial markets; and in addition, this will affect the position of the EPF as the largest single holder of MGS which holds RM240 billion (or nearly 27 per cent of total value in the MGS bond market).