Tuesday, March 17, 2009

Not Good Enough

The Employees’ Provident Fund (EPF) Board declared a 4.5% dividend blaming the lower rate of returns on the global economic crisis. It is the lowest returns of dividend since 2003. In comparison, the EPF dividend primed at 8.5% dividend in 1987, and then slipped to the lowest ebb of 4.25% in 2002. Subsequently, it climbed to 4.5% in 2003, 4.75% for 2004, 5% for 2005, 5.15% for 2006 and 5.8% for 2007.

It decided to declare a lower dividend despite the fact that it earned a record RM20bil in gross income last year, up 9.36% from the RM18.29bil recorded previously. Is the money being retained to perform more bailouts? Last year, it loaned RM5 billion to Valuecap Sdn Bhd for its activities to buy Malaysian stocks and left us wonder if we would get this money back! It is time for account holders to demand a full disclosure of the performance and portfolios of investment. It is time a mechanism is proposed to scrutinize the performance.

The worker unions are certainly unhappy. National Union of Bank Employees (Nube) quoted "EPF is a cash rich entity. There is something wrong if there are no reasonable and acceptable dividends being paid out to workers. This has been going on for years where money from EPF has been used to fund government projects and to bail out ailing companies which later rake in huge profits with CEO and managements enjoying fat bonuses of between 20 to 30 months. What about the poor workers in the private sector whose money were used for these bailouts, what are they getting? We have also, time and again, questioned EPF's investment decisions in certain companies. The scrutiny of the EPF board of directors is questionable as the majority of its members are government officers and there are only a few workers' representatives."

Malaysian Trade Union Congress (MTUC) executive said the economic downturn "is not a good enough excuse for paying low dividends because the global downturn only struck in late 2008".

Just compare the return to a similar but much smaller fund manager. The Lembaga Tabung Angkatan Tentera (Malaysian Armed Forces Fund) is rewarding its contributors with a 7% dividend, 3% bonus and 6% special bonus!!! More reasons to be upset!!!

Read my previous articles on EPF.

No comments: