Second Finance Minister Nor Mohamed Yakcop has dismissed claims that ValueCap Sdn Bhd will use the RM5 billion loan from the Employees Provident Fund (EPF) to pay off its debt due in Feb 2009.

nor mohamed yakcop second finance minister During his winding-up speech at the committee stage of the Budget 2009, he said the company's bondholders Pensions Trust Fund Council (KWAP), Khazanah and Permodalan Nasional Bhd have agreed to the refinancing and ValueCap does not have to pay off its current debt by 2009.

ValueCap had also paid interests and dividends to its shareholders at the same time, he added.

Quizzed by Khalid Samad (PAS-Shah Alam), Nor Mohamed also denied that EPF is investing in ValueCap.

"EPF has not changed its policy as the RM5 billion was not an investment in ValueCap's equity but a loan," he said, adding that EPF does not hold any equities in the company.

He further echoed Deputy Prime Minister and Finance Minister Najib Abdul Razak's assurance to EPF contributors that the amount is '100 percent guaranteed' by the government.

"The money would be spent on companies with low share prices but with strong potentials," said Nor Mohamed, adding that it would be good for ValueCap to start investing in the long run to get back on its feet.

EPF's role is important

The minister also gave an assurance that ValueCap would look into strategies when it has successfully created stability in the market and gained profits.

"The government also agreed that EPF has a role to ensure the real economy is generated. EPF has taken an approach to holding bonds that has been offered by the corporate sector," Nor Mohamed said, stressing that banks were unable to finance the projects that need huge funds.

"The role of EPF in this issue is important... by giving RM5 billion to ValueCap, it does not mean EPF's funding in the real economy will be affected because it has funds exceeding RM330 billion," he explained, adding that the government believes in stabilising the capital market.

He explained that through the capital market, there would be a wealth effect that is closely connected to domestic consumption and the economic well-being.

"ValueCap is run by professionals and would give adequate information on the company that would not jeopardise its investment strategies," he assured.

The loan to ValueCap, he further asserted, would however be used only for investment in Bursa Malaysia instead of any foreign investment.