MTUC backs idea of EPF giving home loans

It says it made a similar proposal to the previous government.

The value of homes sold in Malaysia every year run into tens of billions of ringgit, says developer Anthony Adam Cho. ( Bernama pic)

PETALING JAYA: The Malaysian Trades Union Congress (MTUC) has lent its support to a call for the Employees Provident Fund (EPF) to give housing loans to its members.

Speaking to FMT, MTUC secretary-general J Solomon disclosed that his organisation had raised a similar idea with the previous government.

He was commenting on a proposal that the National House Buyers Association (HBA) had raised on Tuesday. HBA said it was offering a solution to the problem of house buyers’ inability to get bank loans and thereby save the government from having to force banks to relax their lending rules. It added that it had “affordable homes” in mind.

Solomon said there were “some differences” between MTUC’s proposal and HBA’s, “but essentially the idea was for EPF to help the Bottom 40”.

The Bottom 40, often abbreviated to B40, refers to the 40% of Malaysians at the bottom rung in terms of income.

MTUC’s proposal referred to EPF’s ownership of 65.4% of Malaysian Building Society Bhd and 40.7% of RHB Bank. It said the fund should direct the two institutions to provide interest-free loans to B40 and Medium 40 workers to help them buy houses priced at below RM300,000.

“The interest saved by the purchasers can then be used to expedite the full repayment of the home loan and utilised for the property management service fees so that the environment will be well managed, unlike what we witness in the People’s Housing Project schemes,” Solomon said.

Melaka-based developer Anthony Adam Cho also reacted to the HBA proposal, saying it needed to be carefully studied as it could affect EPF’s ability to function.

He said the fund might not be able to sustain such a scheme, given that the value of homes sold in Malaysia every year ran into tens of billions of ringgit. EPF might end up being unable to pay dividends to its members, he added.

“Another aspect of the issue that needs to be looked into is that of control,” he said. “If a borrower sells his home after the 10-year lock-in period, where does the money from the sale go?

“If it goes out of the EPF system, the member’s retirement benefits won’t be protected. By right, a portion of the money from the sale of the house should go into the member’s retirement fund.”

He added that such a scheme would diminish retirement savings.

“So, although the idea is good for overcoming the problem of end financing, the impact of such a move needs to be studied in great detail.” -FMT