KUCHING: The Employees Provident Fund’s (EPF) 6.30 per cent dividend rate for 2024 reflects Malaysia’s strong economic recovery and resilience, said Nivakan Sritharan
In stating this, the lecturer from Faculty of Business, Design and Arts at Swinburne University of Technology Sarawak Campus noted that the payout marks the highest dividend since 2019, surpassing the rates seen during the COVID-19 pandemic and subsequent years.
“Compared to historical trends, the increase is particularly notable given that in 2020, during the height of the pandemic, the dividend rates stood at 5.2 per cent for Conventional Savings and 4.9 per cent for Shariah Savings,” he told Sarawak Tribune.
He pointed out that Malaysia’s 2024 economic performance has been a key driver of the higher returns, with GDP growth accelerating to 5.1 per cent from 3.6 per cent in 2023.
“This acceleration was largely fuelled by healthy household spending, export expansion, and strategic government initiatives such as the National Energy Transition Roadmap and the New Industrial Master Plan 2030, which encouraged investments in high-growth sectors,” he said.
He highlighted that Malaysia recorded a historic RM378.5 billion in approved investments last year, a 14.9 per cent increase from 2023, generating over 207,000 new jobs.
“This surge points to strong investor confidence and an expanding economic base that directly supports EPF’s ability to deliver competitive returns,” he said.
Beyond investment performance, he stated that the increased dividend also suggests the government’s efforts to maintain purchasing power in a growing economy.
With consumer spending on the rise and inflation levels under control, he noted that Malaysia’s purchasing power remains stable, ensuring that EPF members benefit from real returns on their retirement savings.
“While Malaysia continues to adopt a cautious approach to fiscal management, gradually reducing the budget deficit through subsidy rationalisation and revenue enhancements, the government’s balance between economic expansion and financial prudence further strengthens confidence in public savings and investment schemes like the EPF.
“Thus, the 6.30 per cent dividend rate not only highlights the EPF’s strong financial health but also serves as a broader indicator of Malaysia’s economic strength.
“It reflects a thriving investment climate, effective fiscal policies, and sustained consumer confidence,” he said.
Looking ahead, Nivakan believes the EPF is well-positioned to maintain stable dividends, although external risks remain.
“Malaysia’s economy recorded an impressive 5.1 per cent GDP growth in 2024, and forecasts for 2025 suggest a steady 4.5 per cent expansion.
“While this signals continued strength, external uncertainties, such as United States President Donald Trump’s tariff threats, could reduce Malaysia’s exports, potentially slowing overall economic momentum,” he said.
Despite these risks, he remains optimistic, citing stable domestic demand, strong investment inflows, and favourable interest rates as factors that could support EPF’s future performance.
“Malaysia’s interest rates are expected to remain stable in 2025, with Bank Negara Malaysia keeping the Overnight Policy Rate at 3 per cent due to manageable inflation and steady economic growth,” he said.
Adding on, he pointed out that a stable interest rate environment supports bond yields and equity market performance, both crucial for EPF’s investment returns.
“If this stability persists, EPF’s ability to sustain its dividend rate remains strong. However, fiscal adjustments could introduce challenges.
“Malaysia’s 2025 budget includes new taxes, expanded SST, and subsidy rationalisation aimed at reducing the national deficit,” he said.
While these measures aim to strengthen long-term economic stability, they could also moderate consumer spending and corporate earnings, which may influence EPF’s investment returns.
“If the government’s fiscal policies successfully balance deficit reduction with economic growth, EPF dividends could remain steady, but any miscalculation may introduce uncertainties,” he said.
On the broader impact of the dividend payout, Nivakan said the RM73.24 billion distribution would boost consumer spending and economic activity.
“Millions of EPF contributors will have increased disposable income, leading to higher household spending on essentials and discretionary goods such as housing, retail, travel, and entertainment,” he said, adding that this could further stimulate business revenues and job creation.
He also pointed out that the increased liquidity in the economy could strengthen Malaysia’s capital markets and encourage reinvestment in key industries.
“More investors may enter the stock market, seeking to grow their savings, while businesses are likely to reinvest in expansion, particularly in sectors aligned with Malaysia’s long-term economic plans,” he said.
Additionally, he highlighted that the increased liquidity could support stronger capital markets by boosting demand for financial instruments such as stocks and bonds.
“The combination of increased spending and investment is expected to contribute to stronger GDP growth, reinforcing Malaysia’s economic strength,” he noted.
In 2024, the country recorded a 5.1 per cent economic growth, driven by robust domestic demand and investment.
Nivakan added that a sustained dividend payout could further drive GDP expansion by fuelling production and corporate growth.
“Moreover, this increased financial security among EPF contributors enhances national savings and long-term economic stability,” he said.
He reiterated that the record RM378.5 billion in approved investments for 2024 is expected to generate over 207,000 new jobs, reinforcing Malaysia’s economic growth trajectory and contributing to EPF’s long-term sustainability.
