(Petaling Jaya, Monday): The DAP Conference on EPF Contributors’ Dilemma held at Hotel Grand Continental, Kuala Lumpur yesterday decided that an EPF Watchdog Panel and an EPF Contributors’ Association should be formed to protect the rights and interests of the nine million EPF contributors whose total funds are in the region of RM160 billion.
The EPF Watchdog Panel, which should be represented from a wide cross-section of society and should have a lawyer, an accountant, an economist, representatives from trade unions, consumers, women, academia, pensioners, etc. would have at least six broad terms of reference.
Firstly, to review the whole concept and structure of the EPF which has outgrown from its modest beginnings in 1951 to provide some retirement security to workers earning low wages to be the third largest provident fund in Asia and which is projected to touch RM200 billion in the year 2,000 - as to whether there is a need to restructure the whole EPF in view of the gargantuan funds as its command.
The EPF had given the lowest dividend in 21 years when it gave a 6.7 per cent dividend for 1997 - when the GDP growth was still a healthy 7.8 per cent. This year the Malaysian economy is heading for a recession, with some economists and financial analysts forecasting a negative GDP growth of as bad as -5 per cent! Will EPF be announcing a dividend even lower than the statutory minimum of two per cent for this year?
An overall review of the concept and structure of EPF is even more urgent in view of the very difficult times that will be faced by the EPF, especially as there is still no light at the end of the tunnel as far as the economic crisis in Malaysia is concerned.
Secondly, to study and review the laws applicable to the EPF to make them more attuned to the needs and aspirations of the times as well as the interests of the EPF contributors, as making the EPF more responsible, accountable and transparent.
In early January, I had asked for a meeting with the EPF Executive Chairman, Tan Sri Sallehuddin Mohamed for a dialogue with DAP MPs over the concerns of EPF contributors about EPF investment policies and decisions, but the EPF Chairman does not even have the courtesy to acknowledge my letter or phone calls from my office. If this is how the EPF Chairman treats the Parliamentary Opposition Leader and elected Members of Parliament, what can the nine million EPF contributors expect from the EPF?
Thirdly, examine and review the investment policy and decisions with regard to the EPF’s stock market operations. Last year EPF invested RM25 billion in the shares market. The EPF contributors have a right to know why the EPF Investment Panel took certain decisions, whether purchase or sale of shares, as for instance, why it bought 65.91 million shares in the United Engineers Malaysia (UEM) between 30 September and 31st October last year, just before the outrageous RM2.34 billion acquisition of 32.6 per cent or 722.9 million Renong shares by UEM, which created a stockmarket earthquake the tremors of which are still being felt today.
It had been reported that the EPF lost RM4 billion in the Kuala Lumpur stock exchange as at the end of last year. Up to now, the EPF and the Finance Ministry have refused to respond to my queries on the matter. Last Friday, the KLSE Composite Index (CI) closed at 445.67 points, one of the lowest levels plumbed by the stock market in the year-long economic crisis - raising fears that it would not be long before the 400-point psychological barrer is broken.
June 1997 started with the KLSE CI at the 1,117.97 level (June 2, 1997). This means that from June 2, 1997 to June 26, 1998 (last Friday), the KLSE CI had lost 61.89 per cent, and if EPF had invested RM25 billion in the stock market in early June 1997, it would have lost RM15.47 billion!
What are the facts? EPF should be frank and forthcoming with all the necessary data for the EPF contributors so that they could review and scrutinise its investment policy and decisions in the stock market.
Fourthly, scrutinise and review the EPF investment policy and decisions with regard to loans, which exceed RM33.8 billion to ensure that there are no loans given to cronies or as a result of imprudent judgements or improper influence.
At the recent UMNO General Assemblies, the Prime Minister, Datuk Seri Dr. Mahathir Mohamad released lists of beneficiaries of privatisation contracts, shares and licences, which should be a normal course of public disclosure by the government as part of good governance rather than as an act in an intra-party feud in UMNO.
With this precedent, EPF should make public a full list of the beneficiaries of its RM33.8 billion loans, giving the names, amounts and the terms of the loans in accordance with the principles of accountability and transparency.
Recently, EPF granted an additional term loan facility of up to RM1.5 billion to the new Kuala Lumpur International Airport Bhd. (KLIAB) at 8 per cent interest per annum, which is well below the current money market rates. The questionable loans, including the billion ringgit loans to Perwaja Trengganu Sdn. Bhd. and even to Khazanah National Bhd., and its involvement in controversial mega-projects like the suspended Bakun hydroelectric dam project, raises serious questions about the propriety of present EPF investment policies.
In the cover story of the latest issue of the Far Eastern Economic Review, the Prime Minister, Datuk Seri Dr. Mahathir Mohamad gave a long interview, the full text of which run into 14 pages.
In the online version of the Far Eastern Economic Review, Mahathir was
asked about mega-projects, and the questions and answers are as follows:
A: It is good for the ego.
Q: Why is that important?
A: It is important because small people always like to appear tall. If you can’t get tall enough you put a box under you.
I am aghast with Mahathir’s answers to justify mega-projects and the nine million EPF contributors do not want a single sen of their monies in the EPF to be used in any mega-project just to satisfy the ego of any one person, however important he is.
Fifthly, to monitor and review the EPF’s billion-ringgit involvement in housing development in the building of low and medium cost houses. This is to ensure that EPF’s involvement in housing in the form of provision of financing facilities for housing project joint-ventures as well as acquisition of land to be developed by a third party, i.e. MBSB or a joint venture-company is not at the expense and interests of the nine million EPF contributors.
Sixthly, to monitor and review the administration and operation of the EPF to ensure that members’ interests are safeguarded and that the workers’ rights and interests are furthered as intended by the EPF Act 1991.
The EPF, for instance, should explain why it had previously encouraged EPF contributors to withdraw up to 10 per cent of their funds to invest in trust funds when various mutual funds mushroomed in the country, purportedly offering high interest rates. Those who withdrew EPF monies to invest in the various trust funds have suffered enormous losses, as what they bought at RM2 a unit is now worth 50 sen. How many tens or hundreds of millions of ringgit of EPF monies had been withdrawn by the contributors on the encouragement of the EPF to invest in these trust funds, going against the very fundamental principle of providing a retirement fund for old age?
Steps are currently being taken to form the EPF Watchdog Panel and the EPF Contributors Association, and announcements would be made in due course. Kuala Lumpur lawyer Ms K.L. Wong has consented to act as legal adviser for the establishment of the EPF Contributors Association, which will seek registration under the Societies Act. Its membership will be open to all the nine million EPF contributors. Other lawyers who wish to help either in the EPF Watchdog Panel or the establishment of the EPF Contributors’ Association are welcome to contact K.L. Wong, Sdr. Ahmad Nor (Chairman of the DAP Labour Bureau which organised the EPF Conference yesterday) or myself.