EPF must not take unnecessary risks, warns Pua

KUALA LUMPUR: DAP National Publicity Secretary Tony Pua on Thursday, April 1 urged the Employees Provident Fund (EPF) to refrain from taking unnecessary investment risks and "over-stretching" the limits of its role under the government's New Economic Model (NEM).

Pua who is also Petaling Jaya Utara MP said at a press conference on Thursday April 1 that the recently announced NEM appeared to enhance EPF's investment role, prompting concerns that the RM360 billion fund would be taking "increasing risks" moving forward.

In announcing the NEM on Tuesday, Prime Minister Datuk Seri Najib Razak revealed that the federal government would form a joint-venture with EPF to develop 3,000 acres of land in Sungai Buloh into a new hub for the Klang Valley, which is expected to lead to over RM5 billion of new investments.

Pua said EPF appeared to be "over-stretching" its limits as it had little competence as a mega-property developer.

Pua added that the EPF should only buy stakes in companies that it believes would perform well instead of taking a "lead role" in the companies.

Pua was also concerned over the EPF's plan to increase its overseas investments from the current 7% to 10% of its fund size over the next year or two.

EPF chief executive officer Tan Sri Azlan Zainol on March 30 confirmed the plan, adding that EPF's overseas investments would be in the equities of public listed companies and the fund would continue investing in the United States, Europe and several South East Asian countries.

"While we do not wish to prejudge the merits of the above measures, the recent actions by EPF in the investment scene and the recent announcements had raised eyebrows and concerns that the sizeable pool of funds in EPF is being made used of by the government, resulting in higher and unnecessary risks.

"The shift by EPF from being a passive portfolio investor to an active major shareholder in diverse industries such as banks and property development without the necessary competencies will only result in sub-optimal investment returns or possibly losses requiring future government bailouts," Pua said, reading from a statement.

The member of parliament also urged the federal government to not treat the RM360 billion fund as "easy pickings for the government" but maintain EPF's core principles of good governance and prudence.

EPF's investments should, by nature, be "conservative and income-based", Pua said while reminding the fund that its main role was to protect the savings and retirement funds of ordinary Malaysians.

According to Pua, the EPF had become "somewhat like a buyer of the last resort" for the government's equity stakes in government-linked companies, including Tenaga Nasional Bhd, Plus Expressway Bhd Holdings, and Malaysian Resources Corporation Bhd (MRCB).

EPF's equity investments had jumped from RM46.9 billion in 2005 to RM93.9 billion in 2009, while the fund's allocations to Malaysian government securities had declined over the same period, Pua noted.

At the same press conference, Charles Santiago (Klang - DAP) said the EPF appeared to have been given the role of underwriting government and private sector investments in the NEM.

"It (EPF) is a cash cow. This is a workers' fund. What's going back to the workers is yet to be seen," Santiago said, adding that the social security fund should protect the interest of its investors.

Santiago added that EPF's role was now in question and asked Najib to state the rationale behind using EPF's funds for private sector investments.

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