by DASHVEENJIT KAUR / pic by TMR file
The Ministry of Finance has rebutted claims that the Employees Provident Fund (EPF) has reported a loss of RM6 billion in its investments.
Finance Minister Lim Guan Eng said the fund did not lose RM6 billion in a month as claimed, as the current share values are still above their initial purchase prices.
“Even with the value of shares, it is still less accurate as the share price is guided by the performance of the FTSE Bursa Malaysia KLCI,” he said in the Dewan Rakyat yesterday.
Lim was responding a question from MP Datuk Seri Dr Adham Baba (BN-Tenggara) who asked the government’s immediate steps to overcome losses suffered by the EPF.
“The reported loss of RM6 billion in shareholdings after the (14th) General Election (GE14) is entirely book value.
“If compared to the original purchase price or book value, the EPF still records overall profit,” he said.
Last month, the media reported the retirement fund had suffered a 12% drop in investment value amounting to RM6.09 billion between May 8 (a day before GE14) and June 7 through its top 10 worst performing counters.
Lim added that for whatever shares not sold, the profits are not recorded and is known as unrealised gains.
“Share prices are prone to volatility and a snapshot of the stock market cannot be used as a result to determine the outcome of any of the EPF’s investment in companies,” Lim said.
He also clarified daily changes of the local benchmark index do not affect dividend distribution by the EPF as it declares dividends based on net profit.
The minister also attributed the decline in stock market performance to the volatility in global market, partly due to trade wars between the US and China, prospects of higher interest rates in the US, a stronger US dollar, the steep fall in Turkey’s lira and capital outflows.
On whether the government would diversify the EPF’s investment portfolio to low-risk investment, Lim said EPF unit holders can be assured they would get their investment back on retirement or when they need it.
“The EPF’s performance is not controversial, in fact its new CEO will also be from among the ranks of the EPF itself,” he said.
In response to a supplementary question from Adham who asked if borrowing can be done from the EPF rather than Japan, Lim said the government’s official currency debt in Japanese yen makes up only 3.1% out of total debt.
“The government’s official currency debt was only RM21.3 billion, and from that amount, RM15.7 billion was in US dollars, while RM5.3 billion in yen,” he added
Lim added that the government is confident the EPF’s investment performance will recover.
“This is in particular with the government’s effort to restore investor confidence through the elimination of corruption and public sector wastage, and ultimately improve the level of competitiveness among the private sector,” Lim added.