AmInvestment Bank Bhd projects that mandatory Employees Provident Fund (EPF) contributions for non-citizen employees could channel up to RM1.7 billion in additional annual inflows into Malaysia’s domestic equity market. According to its Sector Report, the estimate is based on the presence of 2.
5 million foreign workers, a minimum monthly wage of RM1,700, combined employee and employer EPF contributions of 11% and 13%, respectively, and the assumption that 14% of EPF assets would flow into domestic equities, as indicated in the 2023 annual report. The report states that the proposed EPF contribution rate for non-citizen employees with a new contract of employment is 11% for employees and 12-13% for employers, depending on salary compensation. For employees with an existing contract of employment, the contribution rate is proposed to start at 2%, increasing in phases until it is on par with the contribution rate of Malaysian employees within six years.Additionally, Prime Minister Datuk Seri Anwar Ibrahim has called for government-linked investment companies to reduce overseas investments and focus more on the domestic market, further helping the cause. “Assuming the split between domestic and foreign equities is maintained, we estimate net inflows to domestic equities of RM17-23 billion, compared to the past five-year average of RM2 billion (between 2018 and 2023). “This assumes annual inflows to equities of RM30-40 billion (based on historical trends) and that the domestic equity market share is maintained at 57% (2023 levels),” it sai
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