Lembaga Tabung Amanah Tentera(LTAT) Should Consider Taking Over The EPF Investment Panel And Replace Its Chairman Tan Sri Abdul Halim Ali After Its 15.75% Dividend And Bonus As Compared To EPF’s 4.75% Dividend For 2004

Press Statement
Lim Guan Eng

(Petaling Jaya, Tuesday):  LTAT should consider taking over the EPF Investment Panel and replace its Chairman Tan Sri Abdul Halim Ali following LTAT’s dividend and bonus of 15.75% for 2004 as compared to EPF’s miserable 4.75% dividend. Deputy Prime Minister Datuk Seri Najib Tun Razak had announced last week the 15.75 percent dividend involving RM401.4 million as compared with 10.75 percent in the previous year.  

LTAT 15.75% comprises a 7.0 percent dividend, 3.75 percent bonus and five percent special bonus in the form of unit trust. Datuk Najib said the 15.75% was achieved as a result of LTAT's cautious strategies and prudent spending. DAP is not surprised that LTAT’s dividend and bonus leapt by 5% or almost 50% increase to 15.75% in 2004 from 10.75% in 2003. After all, Malaysia’s economic growth rate increased by almost 2% from 5.3% in 2003 to 7.1% in 2004. 

What is surprising though is why EPF’s dividend for 2004 remained so low at 4.75% when LTAT can perform so well on the back of a 7.1% economic growth rate.  There is no economic rationale or logic that EPF could declare a dividend of 4.5% when the economic growth rate was 5.3%, a variance of only 0.8%, but not declare a higher dividend of at least 6% when the economic growth rate had improved to 7.2%.   

In other words, why increase the dividend rate by only 0.25% when the economic growth rate had gone up by almost 2%. Clearly the weaknesses and problems within EPF must be identified and dealt with immediately. To protect the interests of all Malaysians who are contributors towards this fund, DAP calls for the establishment of a Special Committee of Inquiry to resolve these problems.   

Datuk Najib said LTAT's good results were due to its cautious strategies and prudent spending. Does this mean that EPF failed to practice cautious investment strategies and keep down costs with prudent spending? There is something wrong with EPF’s investment strategy that requires the EPF Investment Panel to be replaced. After all how can EPF not record high dividends like Permodalan Nasional Bhd or LTAT when it is allocated blue-chip shares, good investment opportunities that is both low-rich and high earnings returns.  


Malaysia Building Society Bhd’s (MBSB) Dismal Financial Performance And RM 1 Billion Losses

One of the reasons for EPF’s poor investment returns are due to EPF’s involvement in questionable projects and bad loans given out by its 63% owned subsidiary, Malaysia Building Society Bhd (MBSB). MBSB is notorious for giving huge loans to political cronies and well-connected companies of BN such as to the failed Perwaja plant. In Melaka alone, such bad loans by MBSB amount to more than RM 150 million.   

Non-performing loan by MBSB reached a high of RM 4.45 billion in 2002 and is at RM 4.33 billion in 2003. No wonder MBSB achieved the dubious distinction of having the highest non-performing loan ratio of 62% amongst all banks in the country, against the banking average of 7.4% in 2002. MBSB lost almost RM 1 billion in profits from 1998-2002, reducing its shareholder funds of RM 1.1 billion to only RM 70 million. 

DAP believes that Malaysian workers will no longer accept low dividend payments from a clearly non-performing EPF. If the government is serious about ensuring a prompt, efficient and effective delivery changes, the EPF Board and Investment Panel must be completely overhauled and revamped. 

To prevent such bad loans given to political cronies, there is a need for an independent EPF Investment Panel and EPF Board. To ensure accountability and transparency, qualified professionals and opposition parties must be represented to ensure that EPF performs its statutory duty as a custodian of Malaysian workers’ trust fund.


* Lim Guan Eng, DAP Secretary-General