(AFP) The Employees Provident Fund (EPF), the national retirement fund, has defended its investments in government-linked companies amid criticism by opposition parties and workers' unions.

The fund, which manages RM180 billion, is a "prudent and very well-managed" organisation, its chairman Abdul Halim Ali said in remarks published today.

"One should not take a short-term view or criticise the EPF for investing in certain companies which are affiliated with the government," Halim told the national Bernama news agency.

"Our funds will continue to be made available to the government for national development and supporting worthwhile projects, and more so with the immediate concerns of a downturn brought on by the US economic downturn."

Halim said the EPF, which invests 22 percent of its funds in equity markets, was affected by recent sharp falls in the stock market.

"Nobody is risk free ... when the stock market recovers, we will recoup all these investments which we regard as paper losses and interim in nature," he said.

"Every single sen of the people's money is safe, there is no danger of their money being lost as it is invested in a prudent manner."

Halim said the six percent dividend payout last year - the lowest in 26 years - was "very very good" amid an economic slowdown and compared with banks' interest rate of 3.5 percent for fixed deposits.

Union to picket

The Malaysian Trades Union Congress (MTUC), representing some 550,000 workers, said yesterday it would go ahead with a May 12 picket of the EPF headquarters in Kuala Lumpur to protest alleged misuse of EPF funds.

Opposition parties and unions are angry at the fund's action in allegedly bailing out politically connected companies and at the six percent dividend paid to 9.7 million contributors last year.

They cited EPF's purchase of shares in telecoms firm Time dotCom as politically motivated. Time dotCom is a unit of Time Engineering, which is 47 percent owned by debt-laden but politically well-connected conglomerate Renong.

The unions also object a government move to cut workers' contributions from 11 to nine percent of salary for one year to boost domestic demand.

Prime Minister Mahathir Mohamad has urged unions to drop the action. Industrial action and protests by unionised workers are fairly rare here.