Tag Archives: Straits Times 15 Jun 2014

TAN YIP MENG: CANNOT COMPARE SINGAPORE CPF RATES AND MALAYSIAN EPF RATES

The call by protest leaders for rates of more than 6 per cent is misguided, considering that the country's prime rate is only 5.25 per cent. Interest rates are determined by market forces for the economy to function properly, smoothly and free from imbalances. The higher interest rate paid by Malaysia's Employees Provident Fund (EPF) actually reflects financial stress in the country. Since 1997, Malaysia has run up fiscal deficits that have made the country uncompetitive, with high inflation, unemployment, debt and a much depreciated currency. Last July, Fitch rating agency downgraded Malaysia's sovereign outlook to "negative", leading to yet higher borrowing costs or interest rates.

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