The various usage of i-Sinar by eligible Employees Provident Fund (EPF) members, such as settling outstanding financial loans, will still help spur the economy as the funds circulate in the domestic capital market.
Although not all of i-Sinar funds will be channelled towards spending that will stimulate the domestic economy directly, Universiti Kuala Lumpur Business School Assoc Prof Dr Aimi Zulhazmi Abdul Rashid said having the funds in financial institutions will certainly improve the liquidity in the domestic financial system.
“Even if the withdrawn money is later placed in the savings account in banks and other financial institutions like Tabung Haji, Permodalan Nasional Bhd or mutual fund, it still circulates the liquidity back into the domestic capital market,” he told The Malaysian Reserve (TMR).
“We know that the domestic economy needs to be stimulated by more activities at all levels in view of the current recession.
“That is why Bank Negara Malaysia has reduced the Overnight Policy Rate to 1.75%, thus reducing loan interest rates and saving rates to new low. The intention is to make the cost of borrowing cheaper, so that all market segments will apply for new loans to stimulate their respective recoveries and spending,” he added.
In addition, low saving rates would encourage consumers and companies to invest their savings in economic activities rather than leaving the money in the saving accounts with low returns, said Aimi Zulhazmi.
Meanwhile, Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid (picture) said the i-Sinar would certainly help in terms of promoting private consumption, which has more than 50% share in the economy.
Given that households would have more choices to transact via e-commerce platforms, he said i-Sinar would essentially act as an additional income to households.
“Perhaps, reducing or paying off their debts in full would mean the person may have gained some form of financial independence.
“Beyond this point, a person could have a better plan for their families as their financial commitment has greatly reduced, allowing for more disposable income,” he told TMR.
Mohd Afzanizam opined that it is not too bad if the EPF members are to use i-Sinar to settle their financial commitment.
On the latest Strategic Programme to Empower the People and the Economy, he said it indicates the government’s strong commitment to ensure the economic recovery will be well entrenched, covering the various economic sectors, especially the vulnerable groups such as the low-income households and small businesses.
“In light of the fluidity of the current economic condition, the government stance has always been flexible in introducing a timely economic stimulus.
“The increased allocation for the vaccination programme from RM3 billion to RM5 billion suggests that the herd immunity could be reached fairly soon as indicated from the revised timeline, which originally slated to be in the first quarter of 2022, but now has been shifted to December 2021,” he added.