EPF should not be a “last resort” for flood payouts

The criteria to withdraw EPF savings should not be loosened but tightened to counter-balance the impact of existing withdrawals.

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Published in Business Today, Malay Mail, Asia News Today, Focus Malaysia, New Straits Times & Astro Awani, image by Business Today.

The recent floods in eight Malaysian states (i.e., Kelantan, Terengganu, Pahang, Perak, Negeri Sembilan, Melaka, Kuala Lumpur and Selangor) have devastated homes, vehicles, livestock, farms, farming equipment, etc. and with that comes the financial losses and worries.

Against the backdrop of chaos (kelam kabut) and what has been a rather lacklustre attitude from the current administration that has slowed down the search and rescue mission, the quintessential Malaysian spirit of #kita jaga kita once again shone through the bleak and desperate situation when many Malaysians uncalculatingly lent their helping hands to assist flood victims.

On December 28, it was reported that at least 47 people died from the flooding and four people were still missing. Due to polluted water supply, affected residents faced difficulty cleaning up their homes.

A such, the residents who were left with flood-damaged houses, vehicles, furniture and electrical appliances had found it challenging to endure the double whammy of the on-going Covid-19 crisis affecting livelihoods and now the flood disaster.

Not only have they been struggling to put food on the table due to a reduction in income and savings arising from the scarring effects of the Covid-19 induced lockdowns, but the flood has exacerbated the situation by constraining their ability to go out to work as their vehicles were damaged by floodwater, among other calamities.

Notwithstanding, the federal and state governments have introduced numerous initiatives to help flood victims. However, folks like hawker Rohkiah Abdul Aziz from Kampung Kubu Gajah in Selangor complained to the New Straits Times that she did not receive any cash handout since applying more than a week before, as reported on December 20.

She also expressed frustration that some affected residents including herself could not have access to food and shelter at a temporary evacuation centre (PPS) as they were not residents of the area designated to the facility.

For Selangorians affected by the flood, each household is eligible to receive a total of RM2,000 one-off financial assistance – RM1,000 from the federal government via the Bantuan Wang Ihsan (BWI) and another RM1,000 from the Selangor state government.

Nevertheless, if we were to do a simple calculation (i.e., RM2,000 divided by 5 family members divided by 30 days), each family member merely has RM13.33 to survive per day. It would not be sufficient for a family to navigate through the flood crisis as they have to purchase basic necessities ranging from food (including milk and beverages) to toiletries, clothes, gadgets (e.g., handphones, charges, power banks) and pharmaceuticals (e.g., Panadol) to support and sustain their basic living.

Still, flood victims also could apply for the Bank Simpanan Nasional (BSN)’s interest-free personal loans of up to RM5,000 to buy replacements for household equipment and furniture destroyed in the floods with repayment starting after six months.

Even though the loan schemes would provide breathing space for the flood victims to purchase the required items to rebuild their homes, they still have to pay off accrued expenses after six months. If they cannot repay within the specific timeframe, they will fall deeper into poverty and debt.

There are some who are clamouring for their EPF savings to be withdrawn under an extension of the i-Citra scheme. According to Umno Youth Chief Asyraf Wajdi Dusuki, many flood victims in Kampung Bukit Changgang, Selangor, for example, have pleaded for another round of RM10,000 withdrawal from EPF as they do not have much cash in hand available to spend.

Notwithstanding, Prime Minister Dato’ Sri Ismail Sabri Yaakob and Finance Minister Tengku Zafrul Aziz are resisting such populist move by emphatically rejecting this option as impractical and unsustainable.

Tengku Zafrul’s timely article, “Further EPF withdrawals will burden younger generations in the future” (as published e.g., in the Malay Mail, December 31, 2021) articulated very clearly – in typical technocratic style – that further withdrawals is inimical to the sacred mandate of the EPF to safeguard the contributions of members, among others.

To this, we could also just add that if the populist call for i-Citra to be extended is heeded, the affected contributors or account holders will not be able to enjoy the compounding interest rate associated with their accumulated EPF savings account.

Instead, the Prime Minister has announced that flood victims would receive as much as RM61,000 so that this is precisely to ensure that they do not have to dip into their EPF savings as stated in his New Year message.

The criteria to withdraw EPF savings for “emergency” use should not be loosened – but in fact tightened over the medium to long-term to counter-balance the impact of the withdrawals.

In addition, there is also the Bantuan Banjir Keluarga Malaysia flood assistance five cash incentives amounting to RM10,000 for each head of household.

The RM61,000 will not necessarily be uniformly disbursed but includes a cash voucher of RM500 for the purchase of electrical appliances. There is also the RM1,000 voucher for repairs or purchases to replace vehicles that have suffered serious damage as well as cash aid of up to RM5,000 for house repairs.

Finally, for houses that have been totally destroyed, the government will help bear the cost up to RM56,000 for the construction of a new one.

To further assist the flood victims, EMIR Research would like to propose the following policy recommendations for the current administration to consider:

  1. Increase the unconditional/automatic basic cash quantum of both federal and state government’s financial assistance to a minimum of RM5,000. The ratio of share between the federal and statement governments should be 60/40, i.e., RM3000 and RM2000, respectively.

For a household with five family members, each family member would have RM33 to spend per day (i.e., RM5,000 divided by five family members divided by 30 days).

2. Relocate the affected families to vacant properties under a temporary resettlement programme.

Temporary accommodation could also include converted or modified containers and long-houses as well as modular houses under Industrialised Building System (IBS) schemes.

The government could work with cooperatives and non-governmental organisations (NGOs) to provide some basic furniture (including beds) and accessories.

In addition, to prevent flooding on such a massive scale, flood management should be reconceptualised:

  1. Flood mitigation and defence should be integrated and inter-connected rather than piece-meal.

Meaning – instead of disjointed or isolated flood management systems of sluice gates and pumping stations that are simply connected to the river without any overall strategic purpose – there should be an overall masterplan.

This masterplan ensures that the individual flood mitigation mechanisms support the overall flood management and water security policies, and not least climate change adaptation strategy.

As mentioned in EMIR Research article, “Flood management – please come up with a masterplan” (December 29, 2021), the construction of canals (this time around) should also “inter-lock” with one another and not just “parallel” with one another. That is, secondary canals should connect with primary canals (in turn connected to the underground water storage facilities).

And revolving around the concepts of absorption and storage. 

Adopting and transplanting the impressive Dutch model of “Room for the River” is unfortunately impractical as the over-development precisely takes place on our floodplains themselves, including Kuala Lumpur city centre.

So, apart from the Tokyo (floodplain) model as alluded to in the article, there is also the Singapore’s Marina Barrage model, (alluded to in EMIR Research article, “East Coast flooding: Breaking the annual cycle”, November 10, 2020) i.e., urban water catchment that can be copied for Selangor as the most urbanised state in Malaysia.

The Marina Barrage is similar to the Thames Barrier – that formidable concrete series of 10 separate movable steel gates which stands at 20 meters tall and stretching 520 meters designed to protect the City of London from tidal flooding.

Stamford Diversion Canal is connected to Marina Bay or Reservoir (seen from the perspective of the role that the Barrage play in damming up freshwater). Like the Tokyo model, it’s a canal system that has an underground detention tank.

Our masterplan could have a similar barrage or barrier that protects against tidal and coastal flooding at the mouth of the Klang River – flanked by a series of mangrove swamps along the coast on both sides as eco-barrier to protect against coastal erosion (so as to maintain some land buffer as “second line of defence”).

Our underground tanks and other storage facilities should connect with waste water treatment plants (where possible). Otherwise, they can be converted into portable water for transportation to water treatment plants overland – by pipe or trucks. All in all, the tanks should be divided into two kinds – one for immediate collection and the other for diversion (i.e., to water treatment plants).

Natural water catchments should be identified (and gazetted) in the upstream – in addition to constructing deep and wide canals.

In conclusion, now is the time to rebuild the EPF as it must never be used any longer as a “last resort” withdrawal scheme. At the same time, we must also “rebuild” our flood defence system – for the future.

Jason Loh and Amanda Yeo are part of the research team of EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.

 

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