Hey, that's OUR mon Malaysians alarmed at EPF's handling of their hard-earned retirement savings by Anil Netto ucked away on page What's worse, the EPFBoard is two of The Star on 14 going to charge tht:' KLIAB only g May was a tiny report 8 per cent interest. So, is it any with the innocent­ wonder then that the EPF can looking heading 'EPF nod for only pay us less than 8 per cent additional loan'. But beneath in dhi.dends? that title lay some disturbing news: The loan to the KUAB is among the latest in a se­ 'The Employee's ries of questionable Provident Fund has investments and agreed to grant an loans by the EPF additional term Board. The EPF, loan facility of up with inYestments to RM1.5 billion to totallirg R\1129 the new Kuala billion in 1997, had Lumpur International already pumped in Airport Bhd (KLIAB) at an about 19 per cent or applicable rate of 8 per cent per RM25 billion of our money into annum.' the stockmark~.. t- which is now in the doldrums. That invest­ The report continued: ment in the stock market only 'The KLIAB will use the loan to yielded a pathetic return of 4 finance part of the develop­ per cent. ment cost of the new airport in Sepang.' ~o one knows how much of that inve~ tment mone) has Groan ... so now they are using been lost as share Yalues our EPF money to develop an CO!"tinue to spiral down­ airport. What next? ward::.. Aliron Monthly June 1998: 18(5} Poge 2 Puncak Niaga Or Punca Masalah? Food As 'Look Good' Politics A Sa bah Community's Cry For Help Uncomfortable Thoughts 33 An Assault On Civil Liberties 35 11 ALIRAN'S HOMEPAGE 19 hnp:/ /www.malaysia.net/aliran 36 27 Printed by RP Pdnters Sdn. Bhd. 38 66, 68 &: 70 J•lan Air IIU'I 39 UW60 Pubu Pir~Allg. Malaysi•. 40 Tel : 604 • 2265546 h>c 604 • 2271164 Published by Afuan Keseda.ran Negara (AURAN) U, ]alan Pantai Aziz Ibrahim, 11900 P~tlall Pinang, Malaysia. (Postal Address: P 0 BolC 1049, 10830 Pulau Pinang, Malaysia.) Tel/ f~: 604 • 6415785 Aliron Monthly June 1998: 18(5) Page 3 Also included ill the RM129 bil­ ernment may be tempted tore­ have sound fundamentals, lion in investments were RM34 sort to the EPF, which is prob­ with a good track record of billion given out as loans. These ably the richest agency in the profitability and proven loans earned only 6.5 per cent country in terms of assets, to management. in income, which Wei$ lower save certain companies that than the 7.7 per cent earned may be in trouble. • The EPF should not gamble from the EPF's investments in with the people's money in Malaysian Government securi­ Already, concerns are mount­ companies where the core ties. ing about the rising number of business activity is specula­ non-performing loans given tive such as property devel­ Who did the EPF give these out by banks; who knows when opment. loans to? And why was the in­ intervention may be needed. To terest charged so low? If the avoid asking the IMF to step in • The EPF should not put EPF had invested our money in if and when the need arises, the money in long term infra­ fixed deposits in banks instead government may be looking at structure projects (where ini­ of giving out cheap loans and other cheap, local sources of tial returns are bound to be investing too much in shares, it funds - and the EPF money poor), and other economi­ could have earned at least 11 looks like an easy target. cally unviable or question­ per cent fixed deposit interest. able projects - the EPF in­ And it would then have been But that's our money, not the vestment in Perwaja springs able to pay us contributors government's. The EPF Board to mind. If the projects are much more than the 8 per cent is merely a trustee for our sav­ really feasible, the compa­ dividend we had grown accus­ ings. The Board's role is to pru­ nies involved can easily ob­ tomed to and deserve. dently manage these forced tain loans from banks or savings to yield reasonable re­ raise money on the stock It's a shame that after almost a turns -which at one time com­ market through public is­ decade of strong economic pared favourably with bank sues of shares. growth, we should receive a fixed deposit interest rates-for paltry dividend of 6.7 per cent, workers. • The EPF should not over-ex­ the lowest in 21 years. One pose itseU on the stock mar­ dreads to think what the divi­ It is not wrong to use EPF ket. It could im·est up to a dend for 1998 is going be like money to give loans to or invest maximum of say 10 per cent with the slump in the stock in genuine businesses. But of its funds in shares. But, market and with the use of EPF loans given have to be at com­ certainly not 19 per cent; money to lend to or invest in (or mercial terms, with interest that's leaving the EPF funds to bail out?) certain companies rates comparable to market too heavily exposed to the - with poor returns. rates. Again, it is not wrong for vagaries of market forces. the EPF to buy shares in the The money in the EPF is the stock market. WHO DECIDES? people's money - our money. We, workers, contribute to the But all these investments in the The EPF's contro\·ersialinvest- EPF from our salaries and corporate sector should be sub­ ments raise!> questions over wages, from the sweat of our ject to several conditions: who is responsible for deciding brow, to provide us some secu­ where to invest our money. rity, to make life a little bearable • The companies should not There seems to be some confu­ for us when we retire. be highly geared (heavily sion regarding who ultimately indebted). decides where our money The EPF is not a bailout fund­ should be invested: the EPF though increasingly the gov- • The companies chosen must Board or the EPF Investment Aliron Monthly June 1998: 18(5) Poge 4 Panel. Table detailing l.PJ incomes ,md ,ls.,cts brcakdo\\'n Workers' representatives EPF Assets Income Rate of (unionists) appointed to the (RM Million) (RM Million) Return EPF Board claim they are not Malaysian consulted when decisions are Government made as to where to invest our Securities 38067.5 2941.81 7.73% EPF money. They claim that the Loans 33836.9 2199.71 6.50% Investment Panel decides on its Equity own and they have no say in (Share markets) 24574.2 994.27 4.05% the decision-making process. Money markets 32420.6 2546.22 7.85% Property 479.5 50.62 037% Let's look at what the EPF Act Others 51.82 1991 says about the roles of the Total 129378.7 8784.45 6.79% Board and of the Investment Panel. Source: Business Times, 5 March 1998 Under the Act, the EPF Board should comprise government The law states that the EPF the Board. Thus, it is unaccept­ officers, employers contribut- Board was set up "for the pur­ able for the workers' represen­ ing to the fund, workers repre- poses of managing the Fund." tatives on the EPF Board to say sentatives, and "persons who The Act also states that "the In­ that they were not aware as to shall have experience in ii- vestment Panel shall be subject how our money is being in­ nance, business, or other rei- to such directions issued by the vested. It would be much evant experience." Board and approved by the honourable for these represen­ Minister, from time to time." tatives to resign from the Board The EPF Investment Panel rather than to remain and add should include the Bank Further in the Act, it is stated legitimacy to investment deci­ Negara Governor, a Finance that the Board "sha11 be the sions that they had no part in Ministry representative, and trustee of the Fund." Section 26 and which are not in keeping "three other persons who shall of the Act outlines the "Power with the Act itself. have experience in finance, of the Board to invest" (note the businessorotherrelevantexpe- power lies with the Board Right now, many EPF contribu­ rience, to be appointed by the rather than the Investment tors feel terribly betrayed by the Minister." Panel). EPF. Many would like to with­ draw their savings if they could So which has the final say on Clearly, under the Act, the In­ and invest in fixed deposits, deciding where to invest our vestment Panel comes under which earn much higher inter­ money- the Board or the Panel? the direction and supervision of est. The EPF Board should remind itself that it has a heavy respon­ The EPF must never allow itself sibility to contributors to pro­ tect their assets. It must safe­ to become a Bailout Fund for guard the workers' interests above everything else. It must certain doomed companies. never allow itself to become a Bailout Fund for certain doomed companies. 0 Aliron Monthly June 1998: 18(5) Poge 5 EPF funds usecl to save YIPs, tycoOns ancl cronies Board ignores members' right to question investment deals By Lim Kit Siang RMl.S billion from EPF will be about the proposalfor EPF to pay used to bail out debt-laden UEM UEM RMI.S billion for a stake in by buying a 20 per cent stake in PLUS until it was announced in Projek Lebuhraya Utara-Selatan Parliament.