By Daniel John Jambun
In the interest for transparency and wisdom in our country’s financial management, we need to seriously rethink the proposal by the Minister of Finance, Datuk Seri Najib Tun Razak to inject a rescue package of RM5 billion to purchase undervalued stocks for Valuecap Sdn. Bhd., purportedly to shore up the KLSE.
A main concern about this rescue package is the fact that the RM5 billion will come from the Employee’s Provident Fund. Our immediate reaction is to question the rationale of dipping our fingers into the EPF, which is a fund that belongs directly to the nation’s employees. Is it proper that the government simply takes any part of this fund for the purpose of salvaging one company?
It is not the first time that the EPF has been utilized by the government as a source of funds for rescue financing. In 1996, RM500 million was taken to rescue the ailing Perwaja, which since 1994 was collapsing under a mounting debt of US3 billion. The in 2001, RM1.9 billion was taken from EPF to rescue Time Dot Com—almost 200% of the amount taken for Perwaja. Now, the RM5 billion intended for Valuecap comprises a substantial amount compared to the previous two.
Several very important considerations arise in this case, the least of which is not the high risk in subjecting the people’s savings to the high risks of volatile stock fluctuations. The original intention of the EPF was for employees to set aside savings for their post-retirement years. In other words, the EPF is their life. If the government can extract RM5 billion today, it will be given the understanding that it can do the same in greater amount tomorrow. A strong message to oppose this trend must be sent now.
We would at least feel some sort of consolation if we have any certainty of good return of investment with this undertaking. But such a certainty does not exist. What we can foresee is the high possibility of this turning out to be another error of judgment that will make another red entry in the history book. Because the probability of wastage through loss looms high, we need to ask: Who will be held responsible if this loan from EPF is not repaid? And more importantly, who will suffer most from the consequences of such a loss?
A problem with the sizable amount of RM5 billion is that it pales in comparison to the total value of the KLSE which is currently around RM689 billion. This ratio tells us that it is very doubtful if the RM5 billion will make any significant impact in stimulating the KLSE. The small drop in ocean will not lead to any multiplier effect.
Another problem with the proposed fund injection is that we inevitably have to ask if there is any other hidden agenda behind it. While the purported motivation is to stimulate the sliding KLSE, could it possibly be that certain parties would benefit from the RM5 billion? Who would be in the position to gain with such a huge fund injection into Valuecap? It is public knowledge Valuecap is owing its three stockholders (Khazanah, Kumpulan Wang Amanah Pencen and Permodalan Nasional Bhd) RM5.1 billion that was due to be repaid in 2006, but was given a three-year grace period to February 2009. The similar amount of this debt and the intended amount to be injected from EPF certainly raises a lot questions. Could it be possible that the EPF will be use as payouts to the three stockholders? Without the fund injection, won't Valuecap be in jeopardy of toppling over?
In the new political scenario where the people pay greater attention to accountability and good governance, the federal government needs to seriously change its attitude and not do anything that jeopardizes that people’s interest, let alone their life saving fund. It must be recognized that there is an unwritten sanctity implicitly attached to the EPF, and this must be guarded by the government with a deep moral responsibility.
In the interest for transparency and wisdom in our country’s financial management, we need to seriously rethink the proposal by the Minister of Finance, Datuk Seri Najib Tun Razak to inject a rescue package of RM5 billion to purchase undervalued stocks for Valuecap Sdn. Bhd., purportedly to shore up the KLSE.
A main concern about this rescue package is the fact that the RM5 billion will come from the Employee’s Provident Fund. Our immediate reaction is to question the rationale of dipping our fingers into the EPF, which is a fund that belongs directly to the nation’s employees. Is it proper that the government simply takes any part of this fund for the purpose of salvaging one company?
It is not the first time that the EPF has been utilized by the government as a source of funds for rescue financing. In 1996, RM500 million was taken to rescue the ailing Perwaja, which since 1994 was collapsing under a mounting debt of US3 billion. The in 2001, RM1.9 billion was taken from EPF to rescue Time Dot Com—almost 200% of the amount taken for Perwaja. Now, the RM5 billion intended for Valuecap comprises a substantial amount compared to the previous two.
Several very important considerations arise in this case, the least of which is not the high risk in subjecting the people’s savings to the high risks of volatile stock fluctuations. The original intention of the EPF was for employees to set aside savings for their post-retirement years. In other words, the EPF is their life. If the government can extract RM5 billion today, it will be given the understanding that it can do the same in greater amount tomorrow. A strong message to oppose this trend must be sent now.
We would at least feel some sort of consolation if we have any certainty of good return of investment with this undertaking. But such a certainty does not exist. What we can foresee is the high possibility of this turning out to be another error of judgment that will make another red entry in the history book. Because the probability of wastage through loss looms high, we need to ask: Who will be held responsible if this loan from EPF is not repaid? And more importantly, who will suffer most from the consequences of such a loss?
A problem with the sizable amount of RM5 billion is that it pales in comparison to the total value of the KLSE which is currently around RM689 billion. This ratio tells us that it is very doubtful if the RM5 billion will make any significant impact in stimulating the KLSE. The small drop in ocean will not lead to any multiplier effect.
Another problem with the proposed fund injection is that we inevitably have to ask if there is any other hidden agenda behind it. While the purported motivation is to stimulate the sliding KLSE, could it possibly be that certain parties would benefit from the RM5 billion? Who would be in the position to gain with such a huge fund injection into Valuecap? It is public knowledge Valuecap is owing its three stockholders (Khazanah, Kumpulan Wang Amanah Pencen and Permodalan Nasional Bhd) RM5.1 billion that was due to be repaid in 2006, but was given a three-year grace period to February 2009. The similar amount of this debt and the intended amount to be injected from EPF certainly raises a lot questions. Could it be possible that the EPF will be use as payouts to the three stockholders? Without the fund injection, won't Valuecap be in jeopardy of toppling over?
In the new political scenario where the people pay greater attention to accountability and good governance, the federal government needs to seriously change its attitude and not do anything that jeopardizes that people’s interest, let alone their life saving fund. It must be recognized that there is an unwritten sanctity implicitly attached to the EPF, and this must be guarded by the government with a deep moral responsibility.
WORKS MINISTER MOHD ZIN SHOULD LIST OUT RM17 BLN PROJECTS…
I am challenging Federal Works Minister, Mohd Zin, to list out all the infrastructural projects worth RM17 billion that he had recently claimed would be carried out in Sabah from now till 2012.
I am challenging Federal Works Minister, Mohd Zin, to list out all the infrastructural projects worth RM17 billion that he had recently claimed would be carried out in Sabah from now till 2012.
Unless subtstantiated with a solid facts, what Mohd Zin had said is tantamount to misleading if he could not prove to the people the full list of RM17 billion projects to be carried out in Sabah, and their beneficiaries.
This kind of announcement of huge funds is smacked of Barisan Nasional’s arrogance. We do not yet know the truthfulness of all this big promises. They mentioned big figures for short period. Are all these for real?
I want to highlight just one example of their old tricks. The asphalting of the Kokol road from Menggatal town was approved during the 7th Malaysian Plan (1996-2000) but only now at the very end of 9th Malaysian Plan, the road is finally being asphalted !
There were many projects and funds announced by Federal leaders during the Ijok by-election last year, but until now those projects are yet to be seen by the Ijok folks. Ijok is a joke.
Now hundreds of millions of ringgits are being announced for Pensiangan, just because of an impending by-election there. If the Federal leaders are sincere to help, they should have completed many projects there long time ago.
Nabawan is second only to Pitas in term of poverty, why must wait for a by-election to act and help big?
The poeple ought to read why even BN MP Ghapur Salleh is skeptical on BN promises...
Having said that, of course we do welcome whatever help and projects for the Pensiangan folks. They are in dire need, regardless of their political affiliation.
In fact, Pakatan Rakyat has been successful to “force” the federal to offer more to Sabah and Sarawak...
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