Housing issue: We were not set up to give loans, says EPF

It says it is structured towards investment and fund management, while its mandate is to provide a safe place to invest and grow its members' savings for retirement.

The Employees’ Provident Fund says managing housing loans requires a different set of skills from what it has.

PETALING JAYA: The Employees’ Provident Fund (EPF) says the proposal by a consumer group for it to provide housing loans to members, particularly for affordable homes, would cause it to deviate from its original social intent.

Responding to the proposal by the National House Buyers Association (HBA), the EPF acknowledged that it was “close to impossible” to find a home in Kuala Lumpur or other major urban areas that fit Bank Negara Malaysia’s definition of affordable.

The central bank defines affordable homes as property where the price is three times the annual household income, ranging from RM165,000 to RM242,000.

In a statement to FMT, the EPF said its mandate and purpose was to provide a safe place to invest and grow its members’ savings for retirement purposes.

“Providing housing loans, or any loans for that matter, would be a departure from its original social intent as the EPF should not create situations of indebtedness for its members.

“In addition, the current EPF structure, competencies, skills and processes, which are more towards investment and fund management, would have to be repurposed in order to give out loans the way banks do.”

The EPF added that managing housing loans required a different set of skills, particularly in performing tasks like property valuation, credit evaluation and risk assessment.

It noted that it had an existing facility under its Account 2 for members to withdraw their savings to help finance the purchase of a home and settle or reduce housing loans.

Additionally, it said, sufficient affordable homes could not be built where there was demand.

“So, the conversation should shift from home ownership for all Malaysians to providing comfortable and decent shelter for all, for example, the HDB (Housing and Development Board) lease model in Singapore.”

Singapore’s HDB develops public housing units and leases them out for 99 years. According to reports, as of 2015, some 82% of Singapore’s 3.9 million residents live in HDB units.

HBA had previously mooted the idea that EPF be allowed to finance home loans for members as many house buyers were unable to get bank loans. It said if EPF allowed loans, the government would not need to force banks to relax their lending rules.

The Malaysian Trades Union Congress had lent its support to the idea, noting that it had made a similar proposal to the previous government.

However, developer Anthony Adam Cho disagreed, saying the idea needed careful study as it could affect EPF’s ability to function. - FMT