On the 23rd of June 2011, the EPF (KWSP) tabled its annual report to the parliament, declaring a 5.8% dividend and explained that 27% of its investments were in Malaysian Government Securities (MGS) and 32% were in loans and bonds to Govt agencies. A simple chart below summarises the report. At RM 440.52 billion, the EPF is one of the largest funds in the world and represents the life time savings of 12 million private sector employees.The question is why is it that over 60% of EPF funds are in loans to the Govt and Govt bodies? Is the Malaysian Government a good borrower?
Let’s look at the BN Govt’s financial record….
Below is a summary of the Govt’s annual deficits. The 2012 budget will mark the 15th year of budget deficit with no signal of financial prudence. And as you can see below, there have been supplementary budgets on top of the annual budgets every single year.
Govt debt as at Dec 2010 stands at 407 Billion ringgit. 60% of this or 240 Billion is owed to the EPF. This means the BN Govt of Malaysia has already spent 60% of all your savings in the EPF!
After running deficit budgets for 14 consecutive years, and funding those deficits by borrowing, Malaysian Govt Securities (MGS) are rated at CC(-)ve. At CC minus, what is the annual yield? Folks, it’s an unbelievable 3% and below!! Why? Because MGS are not auctioned!! There is a ready buyer for MGS and apart from the endless new PNB funds like the 1Malaysia bond, the main buyer of Malaysian debt papers is the EPF.
“Fair Value” rate for lower grade papers of single A and below is an annual yield of 5% and above. Greek Govt bonds for example are being traded at yields exceeding 21% per annum.
The constitution of Malaysia caps Govt debt at 55% of GDP. As at 30th June 2011, Govt debt stands at 433 billion, which is 53% of GDP. At 55% the Govt will be officially in crisis and the constitution will need to be changed to increase borrowing and possibly even require a bail out.
Recently the EU central bank agreed to extend financial aid to the Govt of Greece on the condition they adopt massive austerity measures and that the lenders take a haircut of 50% of all outstanding loans. After all, they continually lent to a borrower who showed absolutely NO commitment to cut expenses and begin to service their debts. Just imagine if the EPF is asked to take a 50% haircut of their debts from the Malaysian Govt!
An even worse scenario was painted recently by Pakatan Rakyat when they reported that much of govt debt was unreported as it is largely hidden from public eye in the form of debt owing by Govt agencies.
As you can see above, the 433 billion owed by the Govt is represented by the red and Orange bars. On top of official figures, an additional 184 billion is owed by various Govt agencies.
Take a look here at another explanation,
So…. Is the EPF being looted? I say yes it is. Let me explain how.
A summary on the 2012 budget is below,
So…. Is the EPF being looted? I say yes it is. Let me explain how.
A summary on the 2012 budget is below,
kalau pembangkang berjaya mengambil alih kerajaan persekutuan, dimana agaknya mereka membuat pinjaman untuk membiayai pembangunan di negara ini termasuk mengurangkan harga barang dengan meningkatkan subsidi barang dan minyak dan dalam masa yang sama menyelesaikan masalah2 infrastruktur sekelip mata??
ReplyDeleteagaknya pembangkang juga akan lakukan perkara yang sama, malah lebih teruk lagi iaitu meminjam dgn IMF seperti yng Anwar ingin lakukan pada masa lalu.
DeleteYang pakar patut jawab soalan ini.
DeleteTidak apa mereka pasti ada sumber lebih bijak daripada pemimpin UmnoBN.
DeleteHopefully in the future, there will be consent of the EPF holders before any actions to be done by the government pertaining their funds.
ReplyDeleteThe EPF holders agreement must be obtained before any investments are made.
DeleteSebaiknya duit simpanan rakyat ini tidak boleh diganggu.
ReplyDeleteOf course that is the best way, but how would KWSP pay interest to the holders without investments?
DeleteSelagi pencarum tidak memberikan kebenaran rasanya kerajaan tidak boleh mengunakan KWSP pencarum tersebut.
ReplyDeleteAny investments made with the people's EPF funds have to be low risk or risk free.
DeleteWang harus diatur dengan baik kerana hanya sekelip mata boleh hilang jika tidak ada aturan yang baik.
ReplyDeleteThe money belongs to the people and they depended on the EPF fund when they retire.
DeleteBerkaitan dengan wang KWSP, kerajaan perlu memaklumkan hal berkaitan kepada pemegang akaun KWSP sebelum menggunakannya.
ReplyDeleteAgree, the EPF holders have the right to know where their savings are spent.
Delete