By Free Malaysia Today Staffs
KUALA LUMPUR: While many are mulling over the implications Prime Minister Najib Tun Razak’s New Economic Model (NEM), which among others, allows the Employees Provident Fund (EPF) to increase its investments overseas, the Malaysian Trade Union Congress has issued a caution.
MTUC expressed its reservations over Najib’s announcement on Tuesday, reminding EPF that it held in trust people’s life and old-age savings.
Said MTUC president Syed Shahir Syed Mohamud: “We understand the need to expand and move into heavy investments. But we implore the government and EPF to be careful with the people’s savings.
“High investments usually means bigger risks. We have seen how hugely successful companies like Enron (in the US) collapsed overnight due to mismanagement. EPF must be very careful. “
Syed Sharir said while he accepted the Government’s aim to enhance the liquidity of the local market through the involvement of foreign fund managers and investors, it was imperative that dealings are transparent.
He said the government and EPF must “double and triple verify” the background of fund managers it hires to ensure their credibility.
“Whatever it is the government and EPF must be prudent and transparent in all its dealings. Malaysians will watching them closely,” he said.
EPF has over the years limited its major investments to the domestic front. Currently 70 percent of EPF’s investments are classified as low risk types.
At the end of 2008, EPF was the controlling stake holder in two listed companies, Malaysia Building Society Berhad (63.33 percent) and in RHB Capital Berhad (57.27 percent).
EPF also holds equity in 30 other companies. Its stakes range from from 11.68 percent (YTL Corporation Bhd) to 31.59 percent (Malaysia Resource Corporation Berhad).
“On the domestic front EPF’s investments have been robust. In 2008 the EPF Board announced a dividend rate of 4.50 percent. The government guarantees a minimum 2.5 percent on all contributions,” he said.
EPF, with 12.4 million members, has a fund size of over RM307 billion.
Cronies and gluttony
Meanwhile Pakatan Rakyat leader Anwar Ibrahim has urged the rakyat to be wary of the NEM in relation to the EPF funds.
He said there were concerns over Najib’s announcement that the EPF funds will be used to buy into companies and participate in new investments.
“This is worrying because in future millions of our employees will become victims of greed and gluttony by leaders and their cronies who will take the opportunity to use public funds to enrich themselves.
“It is the responsibility of all Malaysians to stay alert and monitor whatever decisions or purchases made by EPF after this because we are certain there will be interferences which will force or influence EPF’s decisions.
"The bigger responsibility however lies with the PM and the government.
“Najib needs to list out all the steps taken to ensure that the process of investment and involvement of EPF in new businesses is carried out in a transparent manner,” Anwar said.
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