MTUC demands explanation for EFPs low dividends

comments     Claudia Theophilus     Published     Updated

A number of groups today expressed outraged over the low dividend rate announced by Employees Provident Fund (EPF) with the Malaysian Trades Union Congress (MTUC) demanding an explanation for the categorising RM1.141 billion of the fund's investments as "doubtful loans".

MTUC secretary-general G Rajasekaran said in a statement, this category, which has increased from the RM754 million for 2000, had contributed to the poor performance over the last few years, such as the five percent dividend rate declared for 2001, the lowest ever in 38 years.

According to Rajasekaran, the RM1.141 billion was categorised as "a higher provision for the diminution in value of equity and doubtful loans" in the statement released by EFP yesterday.

He told malaysiakini that more than a quarter of the total "doubtful loans", estimated around RM500 million, was used to rescue the ailing telecommunications company Timedot Com Bhd through a purchase of 78.7 million shares.

Last April 28, The Sun reported that the government explained that the RM500 million was the unpaid portion of the company's borrowings of half a billion ringgit from the EPF in 1996.

Rajasekaran said today the decision was not prudent at all, especially since the EPF went in knowing that it was lending contributors' money to a loss-making company.

"The lack of accountability of the EPF investment panel to the board has raised questions of transparency and doubt on whether or not the funds are being used in the interest of contributors," he said, expressing the MTUC's "deep concern" over the current state of the country's largest pension fund manager.

The MTUC will hold an emergency meeting on March 22 for all 230 affiliates to decide on an appropriate action.

New team needed

In a statement yesterday, EPF chairperson Abdul Halim Ali declared a five percent dividend for 2001. Last year, the EPF declared a six percent dividend for 2000, the lowest ever in 25 years.

The gross income for 2001 was also lower at RM9.01 billion compared with RM10.2 billion for 2000.

Meanwhile, ERA Consumer Malaysia president N Marimuthu, exasperated by the declining dividends and "lame excuses" offered by the EPF, wants the entire investment panel replaced with a new team.

"Enough is enough. The same people have been making the same mistakes all these years. It is time to change the entire team.

"A wider representation from among ordinary citizens, including retirees, consumer and special interest groups will ensure more transparency and accountability to contributors in the EPF's management of the huge RM187 billion fund," Marimuthu told malaysiakini today.

The EPF board has five employees' and five employers' representatives.

Marimuthu also said that people have lost faith in the five workers' representatives on the board who have become "part and parcel of the establishment instead".

"As a contributor, I'm tired of getting excuses from the EPF about low bank interest rates when other fund managers can declare much higher dividends despite the same economic conditions."

Review investment policies

N Siva Subramaniam, president of Cuepacs, the largest public sector union, called for the EPF's investment policies to be reviewed "with focus on overseas investment opportunities".

"If the EPF's investment policies are not reviewed, the dividend is going to go down next year whether we like it or not, and no one can assure us otherwise, partly due to the world economic downturn," said Siva, who is also one of the five workers' representatives on the EPF board.

On a similar public outcry last year after the six percent dividend was declared for 2000, Siva said the "problem is not as easy as you think".

On Jan 27, Abdul Halim announced that the EPF will invest more in the local share and bond markets from the current RM42 billion to about RM50 billion "to enhance yield on the savings" for its 10 million contributors.

National Union of Plantation Workers (NUPW) executive secretary A Navamukundan said a social dialogue between the EPF and public interest groups and businesses has become necessary.

"The various interest groups around should have a say on how the funds should be deployed and this can be a very healthy exchange of views.

Higher dividends

"Ultimately, the money belongs to the people and they have a right to make their feelings known. The EPF board itself should remain tripartite with representatives from the government, employers and workers," said Navamukundan.

He also noted that despite the country's economic downturn, other funds have done much better, like Permodalan Nasional Berhad (PNB).

"If PNB can chalk higher dividends, what is wrong with the EPF? Clearly, it needs to buck-up. This is a long-term savings fund and people expect more prudent investment policies. This calls for some soul-searching within the EPF and the government.

"Don't go gambling with 10 million contributors' money," Navamukundan said, adding that the EPF board cannot continue hiding behind "low bank interest rates" as it was collectively responsible.



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