Thursday, 15 April 2010

DAP: EPF must not become government’s ‘cash cow’

By Asrul Hadi Abdullah Sani
KUALA LUMPUR, April 1 — The DAP’s Tony Pua urged the Najib administration today not to misuse the Employees Provident Fund (EPF) and make it the government’s “cash cow.”The DAP national publicity chief and economic strategist stressed that EPF should act as a social security fund and not a personal investment fund.
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“The recent announcement of EPF’s increasing investment role in the prime minister’s New Economic Model speech has raised increasing concerns over the increasing risk the EPF will be taking going forward.
“In was announced by the prime minister and confirmed by the EPF chairman that the fund will be allowed to increase its overseas investments to ten per cent of its fund size over the next one or two years,” he told reporters in Parliament here.
He stressed that the state-owned pension fund should not undertake high-risk investments but instead concentrate on protecting the savings and retirement funds of ordinary workers.
“While we do not wish to prejudge merits of the above measures, the recent actions by EPF in the investment scene and the recent announcements have raised eyebrows and concerns that the sizeable pool of funds in EPF is being made used by the government resulting in higher and unnecessary risks.
“As it is EPF equities investments has increased from RM46.9 billion in 2005 to RM93.9 billion in 2009. This represents a significant increase in allocation to equity from 18 per cent and 26.5 per cent. At the same time, EPF’s fund allocation to the safest instruments, the Malaysian Government Securities (MGS), has declined significantly from 39.2 per cent to 27.5 per cent over the same period,” he said.
He added that EPF has become “buyer of the last resort” for the government’s equity stakes in government liked companies (GLCs) and its “loans portfolio” has also increased from RM94.36 billion in 2005 to RM145.75 billion in 2009.
Pua said that EPF’s high risk investments will cause “major challenges in the event of slow economic growth or further economic turmoil.”
“The shift by EPF from being a passive portfolio investor to active major shareholders in diverse industries such as banks and property development will without necessary competencies only result in sub-optimal investment returns or possibly losses requiring future government bailouts.
“We call upon the EPF and the government to maintain its core principles of good governance and prudence in the EPF, and not treat the RM360 billion in the fund as easy pickings for the government,” he said.