For many Malaysians, retirement is becoming a pipe dream as the economic fallout of the coronavirus pandemic pushes more into poverty, forcing many to deplete their savings while incomes remain stagnant. The Employees Provident Fund (EPF), introduced in 1951, has long been the sole safety net for most people. Contributions to the fund, which has more than 1 trillion ringgit (US$236.7 billion) in assets, are compulsory by law and withdrawals are only allowed once citizens turn 55, barring exceptional cases. When Covid-19 first reached Malaysian shores in 2020, triggering a months-long lockdown that resulted in many workers losing their wages, many called on the government to allow them to tap into their hard-earned savings. Heeding those calls, the government last year directed that citizens be allowed to draw down some funds from their accounts, a development that the provident fund’s chief executive Amir Hamzah Azizan later said “shook us to the core”. While members are allowed to use a portion of their EPF to pay for certain needs including a deposit for their first home and medical emergencies, this was the first time ever that an ad hoc early withdrawal of this sort had been allowed. “We cannot ignore the fact that we did good for the guy who did not have funds to survive the down cycle,” Amir Hamzah said in an interview with The Edge newspaper. “Last year’s withdrawal kept me alive,” said Shamaine Othman, a writer, comedian, actor and producer who saw her income halved during the imposed lockdowns, which forced many entertainment-related activities to be cancelled. Tech investors take a shine to Indonesia amid Malaysia’s instability Since the first directive allowing EPF withdrawals in April 2020, the government unveiled three further windows for such transactions, with the permissible withdrawals ranging from 5,000 (US$1,190) to 60,000 ringgit (US$14,285) based on their account balance. The latest drawdown was capped at 10,000 ringgit (US$2,380), and was announced by Prime Minister Ismail Sabri Yaakob on March 16. The prime minister said he was aware of the possible negative impact of the government’s decision on people’s retirement adequacy, but believed it was a fair compromise. “This is the middle path in balancing between the pressing need of today and the savings for the future,” he said. While the moves have been cheered by Malaysians facing financial duress, critics say the government’s decision is not only “unsustainable” but harms the financial future of the country’s most vulnerable. EPF said in a statement last October that 7.4 million contributors had withdrawn a cumulative 101 billion ringgit (US$23.89 billion) in the last three withdrawal schemes, resulting in as many as 6.1 million people now having less than 10,000 ringgit in their retirement funds. A greater cause for concern is that more than half – 3.6 million – now have less than 1,000 ringgit in their EPF accounts, exposing them to the prospect of being poverty-stricken when they reach 55. Malaysia’s political uncertainty has led to an exodus of foreign investors Sunway University economics professor Yeah Kim Leng said the early EPF withdrawals were seeding an old-age poverty problem for the country. “Acceding to the latest demand for the fourth of such withdrawals is contributing to the further depletion of the country’s retirement savings pool,” he said. Melati Nungsari, Assistant Professor of Economics at Asia School of Business in Kuala Lumpur, said it was unclear if the withdrawals achieved their short-term goal of helping people tide over a difficult time, and was also detrimental in the long run. “It’s pretty clear that it will make poor people poorer,” she said. With Malaysia’s average life expectancy at 75.6 years, Melati said poverty was already a pressing issue even before the pandemic hit. The economic contraction since 2020 only worsened the situation, with many likely being forced to continue working well into their supposed retirement years. When the first of several lockdowns was first imposed in Malaysia between March and April 2020, Melati canvassed her colleagues to see how they were coping. She discovered a small minority of middle-income earners, and half of lower-income earners, were already reporting negative cash flow at a time when the crisis was barely a month old. While a cash injection from the government would help reverse the negative cash flow, she said only a small minority of people had savings that could last longer than three months. “Because the government is allowing EPF withdrawals, whatever little cushion households have had over their lives has now gone away,” Melati said. “With this latest round – it’s highly doubtful that the people who needed the cash even had it to begin with.” While economists and even Finance Minister Tengku Zafrul Aziz voiced their discontent about EPF withdrawals, Hafidzi Razali of the BowerGroupAsia political consultancy suggested it boiled down to politics. “As it stands, salaries have not increased in proportion to inflation, quality jobs are scarce, and one-off government assistance is never enough,” Hafidzi said. “Neither side of the political divide would want to bear the political disaster of denying EPF depositors their own hard-earned money when many are slipping into desperation.” Minimum wage increase Meanwhile, facing strong lobbying from Malaysian employers, the government has also been dragging its feet on increasing the minimum wage from the current 1,200 ringgit to 1,500 ringgit. Human Resource Minister M. Saravanan has publicly said that surviving in the city on a monthly salary of 1,500 ringgit (US$355) was nothing short of “a miracle”. “Not even foreign workers can survive, what more for us? Living in a big city, one would need a minimum of 3,000 ringgit,” said the minister in a press conference last April. Malaysia expects US$200 million boost as China-backed trade pact starts In 2020, the United Nations special rapporteur on extreme poverty and human rights Philip Alston decried Malaysia’s national poverty line of 980 ringgit a month, calling it a “tragically low line” leading to a skewed perception that less than 25,000 households were in poverty – a statistic that would be the lowest in the world. While Prime Minister Ismail Sabri has promised a minimum-wage increase would happen by May Day this year, it would only apply to big companies and government-linked companies. Human Resource Minister Saravanan told parliament it would be implemented “in due time” for other firms, and the government’s commitment was to enforce it “by the end of this year”. Even so, the government is reportedly considering making exceptions to small and medium enterprises and microbusinesses from having to comply with the minimum wage law, according to Saravanan’s deputy Awang Hashim, as reported by local daily Utusan Malaysia . On social media, the Malaysian public panned businesses who are against the minimum wage hike, with one Twitter user pointing out that companies that could not afford to pay minimum wage should not be in business. “If your business model doesn’t account for minimum wage, then you have a bad business model, period,” Doh Nyawen said.