ECONOMISTS have praised the Employees Provident Fund (EPF) for its decision to declare a 6.30% dividend for both conventional and Shariah savings for 2024, citing it as a positive signal for Malaysia's capital market and investment sector. ‘
In a Bernama exclusive today, Muhammad Irwan Ariffin, Associate Professor of Economics at the International Islamic University Malaysia (IIUM), said EPF’s robust investment performance underscores the resilience of the Malaysian market.
"This enhances investor confidence, including foreign investors, potentially attracting more investments into projects that could benefit the economy," Dr. Muhammad Irwan said in an interview with Bernama.
Despite ongoing global economic challenges, he noted that EPF remains well-positioned for sustained success, thanks to its diverse and balanced investment portfolio—comprising 63% local and 37% international assets.
"Both segments contribute almost equally to the fund's investment income—49.7% from local investments and 50.3% from international ones. This strategy has proven effective in managing risks while leveraging global opportunities," he explained.
Dr. Muhammad Irwan also stressed that EPF’s future success will hinge on prudent investment decisions and continued diversification to navigate economic uncertainties.
The EPF’s recent 6.30% dividend rate for 2024, which translates to a total payout of RM73.24 billion, comes in the wake of a global and domestic market recovery.
This solid performance follows a 11% year-on-year increase in investment income, rising from RM66.99 billion in 2023 to RM74.46 billion in 2024.
As of September 2024, EPF managed RM1.22 trillion in assets, with 62.2% allocated to Malaysian investments and 37.8% to international markets.
Dr. Muhammad Irwan highlighted how EPF’s diversified investment strategy has enabled stable returns, even amidst market volatility.
"By spreading investments across equities, fixed-income securities, real estate, and alternative assets, EPF effectively mitigates risks tied to any single market or sector," he said.
He added EPF’s local investments support Malaysia’s economic growth, which registered a 5.1% expansion in 2024, offering long-term benefits for contributors.
Meanwhile, its international exposure allows the fund to capitalize on stronger-performing global markets, softening the blow of any regional economic slowdowns.
Dr. Muhammad Irwan also pointed out that the continued strength of EPF’s dividends reinforces confidence in the fund as a key retirement savings vehicle.
"This could encourage more voluntary contributions from both public and private sector employees, enhancing long-term financial security as Malaysia faces an ageing population and reduces reliance on government safety nets," he said.
He added that the high dividend could stimulate consumer spending by providing retirees with more disposable income.
This would benefit sectors such as retail, tourism, and food services. However, he cautioned that the increased dividend could also contribute to inflationary pressures, especially in sectors facing supply constraints, urging Bank Negara Malaysia to monitor inflation closely in the coming months.
In support of EPF's strong performance, Prof. Dr. Barjoyai Bardai, an economist at the Malaysia University of Science and Technology, lauded the fund as Malaysia's most reliable investment option.
"With nearly 10 million contributors relying on its performance for a comfortable retirement, EPF has consistently proven itself as the best investment alternative," he said.
He recalled EPF's historical peak dividend of 8.5% between 1983 and 1987, suggesting that with its current strong track record, the fund may be poised to achieve similar results again in the future.
"Managing over RM1 trillion, EPF has continued to improve its performance despite its growing size," he added. – March 2, 2025
