HBA: Allow EPF Monthly Withdrawals For Completed Houses Only

07/09/2007 Bernama

KUALA LUMPUR, Sept 7 (Bernama) -- The government should allow Employees Provident Fund (EPF) contributors to make monthly withdrawals from the balance in Account 2 to repay loans for completed houses only, said the National House Buyers Association (HBA).

Prime Minister Datuk Seri Abdullah Ahmad Badawi when tabling the 2008 Budget today, said the government would allow EPF contributors to make monthly withdrawals from the balance in Account 2 for housing loan repayments, effective Jan 1, 2008.

"If you allow it on uncompleted property, my worry is if the project is abandoned, the buyer still has to repay the loan and this will drain out his or her EPF savings," said HBA secretary-general Chang Kim Loong.

Chang said he was concerned that the incentive might be open to abuse as it "opens the floodgate" for contributors to take out their savings for other purposes.

He said this had happened to the previous EPF computer purchase scheme where contributors falsified documents in order to withdraw their money and the government later had to scrap it.

"If the computer scheme with strict criteria could be abused, what guarantee is there that the housing incentive will not be abused? EPF is intended for old age, not for people to simply take out their money," he added.

Therefore, Chang said, the government should instead provide fiscal incentives to financial institutions so that they could waive the interest and capital repayment for buyers of housing projects deemed by the Housing and Local Government Ministry as abandoned.

"Many house buyers became victims of abandoned projects, but they still have to pay the banks. These people need more help, but not by opening the floodgate to take out their EPF savings and channel it into uncompleted housing projects with the risk still on the buyers," he said.

He said the full stamp duty exemption on transfer of property from husband to wife and vice versa did not have any significant effect.

"What the governemnt should do is to give full stamp duty exemption on transfer of property from the father or mother to their children as this would be more meaningful," he added.

Chang said the stamp duty exemption of 50 per cent on documents for transfer of property given for the purchase of a house of not more than RM250,000 also did not have any significant benefit.

"The most you can be exempted is RM2,000. To me, it's not much of an incentive because the legal fee is still the same."

He opined that the housing incentive announced by the government was to spur the property market as there were still many unsold properties in the country.

"Today, the buyers are smart. Location is important. I doubt it would give much incentive to people to buy houses," he said.

Meanwhile, the Federation of Malaysian Consumer Associations (FOMCA) said the decision by the government to allow consumers to withdraw their EPF savings to service their housing instalments was shortsighted.

Fomca president Datuk N. Marimuthu said EPF savings by all means should not be touched before an employer retired.

"I am a bit disturbed by this. I understand the goverment's intention is good but we should not touch the money now. The government must understand that this is savings for old age. People shouldn't be making frequent withdrawals," he said.

He proposed that the government come up with an effective mechanism to determine that withdrawals from Account 2 be channelled directly for repayment of the housing loan.

"We know Malaysians have bad habits. They're willing to spend on expensive handphones and SMSes but can't save money for housing. If they withdraw and pay the housing loan, it's OK, but what if they use it for other things?" he asked.

-- BERNAMA