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Lowest EPF Dividend: EPF should explain the accumulation of RM 15 billion “ paper losses” and their effect on future dividend in coming years

 
Press Conference Statement
- launching of the “ EPF Contributors Deserve Higher Dividend “ Campaign
by Kerk Kim Hock

(Petaling Jaya, Sunday): DAP is launching the “ EPF Contributors Deserve Higher Dividend “ Campaign here today with three objectives:

 

    1.   to protest against the lowest EPF in 40 years of 4.25% for last year,

  1. to demand greater EPF accountability, transparency, quality and security of RM 203 billion EPF Funds
  2. to call for the direct representation of EPF contributors on the EPF Board and EPF Investment Panel to bring about a new policy of full transparency and proper management

There have also been excuses that SARS and Iraq War have caused the lowest dividend. These are unacceptable excuses as SARS and Iraq war only occurred this year while the 4.25 % dividend was for last year.

 

In fact, the nation has registered a higher growth of 4.2 % last year as compared to 0.4 % 2001.

 

The EPF Chairman Tan Sri Halim Ali has explained that the 4.25 % dividend reflected the difficult investment of a low interest rate regime for the last four years as well as lacklustre stock market.

 

But the truth of the matter is that that from 1998 to 2002, EPF has to make provision totaling RM 5.09 billion for  “ paper losses” in equity and doubtful debts, which are as follows:

 

Year

Amount of Paper Losses

1998

RM 435 million

1999

RM 618 million

 2000

RM 754 million

2001

RM 1141million

2002

RM 2140 million

Total

RM 5090 million

 

Is it not true that  if no provision had been made for such huge paper losses, contributors would have been paid  higher dividend irrespective of low interest rate regime and a lacklustre stock market?

 

Recently, MTUC Secretary General G Rajasekaran revealed that EPF is sitting on RM 14 billion of “ paper losses”, with RM 2

billion from EPFs ill advised and disastrous venture as a housing and land speculator in the mid 1990’s through the Malaysia Building Society Berhad, which have to be written off in the next few years, resulting in even lower EPF dividend.

 

In fact, MTUC President Datuk Zainal Rampak has also said that the EPF has suffered RM 15 billion paper losses in recent years due to imprudent investments.

 

If what have been reveled are true, this means that EPF dividend in coming years will be even lower as EPF will have to provide for at least RM 2 billion “ paper losses’ every year for the next five years to clear the balance of some RM 10 billion paper losses.

 

As EPF money is the hard earned cash of the contributors, EPF must explain how the total of RM 15 billion of “ paper losses” were accumulated and their effect on the EPF dividend in the coming years.

(13/7/2003)

*  Kerk Kim Hock, DAP Secretary General & MP for Kota Melaka