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What does the government mean by financial assistance?

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Giving and offering business owners more loans and credit facilities will not ease their burden in the long term, WH Cheng writes.

Recently, the Perikatan Nasional government announced some “financial assistance” to “reduce” the burden of the people affected by the implementation of the movement control order, which resulted in most economic activities coming to a standstill.

What do Prime Minister Muhyiddin Yassin and his cabinet ministers mean by financial assistance? Do they know the real definition of financial assistance?

They are now allowing the people to withdraw from their retirement savings in the Employees’ Provident Fund (EPF) for 12 months starting from 1 April 2020.

This is not financial assistance. This is about taking out our life savings for our retirement to ease our current burden today. So, how are we going to survive in retirement? In the end, we will be blamed for not having enough for our retirement.

Can a higher dividend rate in later years compensate for what has been withdrawn – to top up what is remaining?

The Ministry of Finance has also announced similar packages to affected business owners suffering from zero business following the imposition of the movement control order. This order may result in closures to many businesses.

This “financial assistance” package lowers the requirements for bank loans or extends the loan repayment periods to “ease” the burden of businesses.

This is also not “financial assistance”. Giving and offering business owners more loans and credit facilities will not ease their burden in the long term. Instead, it will increase their loan commitments.

READ MORE:  Only 3% of EPF contributors have enough retirement savings!

Already burdened by plummeting revenue due to their business stoppage or closure, offering more loans or credit facilities to “assist” them to pick up the pieces again is not the solution. Instead, it will burden them with more loans to repay in future, coupled with the interest incurred which they will have to bear in the long term.

In other words, the Perikatan Nasional government is insincere in offering its “financial assistance” because such giveaways merely drain the people’s income in a slower way, or some may not realise that their incomes will be drained away in the long term.

23 March 2020

Source: g-socialaffairs.blogspot.com

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