KUCHING: The 6.30 per cent dividend rate declared by the Employees Provident Fund (EPF) is a positive development, signalling a strong recovery in Malaysia’s capital and money markets, according to economist Dzul Hadzwan.
The Universiti Malaysia Sarawak (UNIMAS) senior lecturer noted that while the rate has yet to return to the 6.9 per cent declared for conventional savings in 2017, it reflects the rapid progress of economic activities both domestically and globally.
He added that EPF’s diversified investment strategy, which allocates funds across both domestic and international markets, has strengthened the fund’s returns while demonstrating the resilience of the broader global business environment.
“This approach not only enhances returns but also reflects the strength of global market conditions.
“Therefore, while the dividend rate is an encouraging sign, it is influenced by international market trends rather than being a direct indicator of Malaysia’s domestic economic health alone,” he told Sarawak Tribune.
On whether EPF can sustain similar dividend rates in the coming years, Dzul said much will depend on global economic trends and key policy shifts, particularly in major economies such as the United States.
“One critical factor to monitor is the potential economic impact of Donald Trump’s policies if he returns to office.
“His stance on international trade – especially plans for tariffs or trade restrictions targeting the EU, BRICS countries (notably China and Russia), and other major economies – could disrupt global markets,” he said.
Given Malaysia’s status as a small, trade-dependent economy, he said such geopolitical shifts could influence investment returns and overall economic stability.
“While EPF has a strong investment diversification strategy, external risks such as trade tensions, interest rate movements, and global economic slowdowns could impact future dividend rates.
“Continuous monitoring of these factors will be essential in assessing the fund’s ability to sustain its current performance,” he said.
Dzul also highlighted the macroeconomic impact of the EPF dividend payout, noting that it would boost consumer spending and investment.
“Many pensioners rely on EPF returns as a source of income, and with the introduction of Account 3, members now have more flexibility to withdraw funds for immediate financial needs – helping them cope with the rising cost of living,” he said.
From an investment perspective, he explained that a higher dividend return strengthens capital accumulation, allowing individuals and institutions to reinvest in the economy.
“This, in turn, can stimulate economic growth by increasing demand in financial markets, real estate, and other sectors.
“Overall, the combination of increased consumer spending and higher investment capacity will contribute positively to Malaysia’s GDP, as both consumption and investment are key drivers of economic output,” he said.
