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    MTUC: EPF should build, not finance homes

    The Malaysian Insider – Sat, Feb 4, 2012
    By Shannon Teoh

    File photo shows a row of low-cost houses. MTUC today slammed Putrajaya’s plans to use RM1.5 billion from the EPF to give home loans to unqualified buyers.KUALA LUMPUR, Feb 4 – The Malaysian Trades Union Congress (MTUC) slammed today Putrajaya’s plans to use RM1.5 billion from the Employees Provident Fund (EPF) to give home loans to unqualified buyers, insisting the “giant institution” was capable of developing housing projects on its own.

    The umbrella body, which represents 802,323 workers from 390 labour unions, pointed to EPF’s RM10 billion development of 1,085 hectares of Malaysian Rubber Board (MRB) land in Sungai Buloh as an example of projects the retirement fund should be pursuing.

    “Instead of just being a financer or partner, EPF should lead and develop projects on its own to gain better returns for its 5.7 million active members,” said MTUC secretary general Abdul Halim Mansor told The Malaysian Insider.

    He added that EPF could develop housing projects to provide homes for workers, estimating that half of EPF’s active contributors still did not own a home.

    The government was forced yesterday to allay fears that the housing loan scheme for those who cannot qualify for commercial financing would result in losses for EPF.

    Federal Territories and Urban Well-being Minister Raja Datuk Nong Chik Raja Zainal Abidin said the loan was secure as it is guaranteed by the Kuala Lumpur City Hall (DBKL), a government agency.

    Under the scheme, applicants will receive a 100 per cent loan, with a repayment period of up to 25 years to allow loan borrowers to make “smaller” monthly repayments.

    But the opposition has raised doubts over the minister’s assurances, stating that with such a guarantee, banks would be rushing to provide the loans instead of shying away.

    Under the deal, the EPF earns 5.5 per cent interest per annum in repayments made by every home owner.

    But Abdul Halim pointed out today that 5.5 per cent was below the normal rate of return for EPF, which dished out 5.65 and 5.8 per cent dividends in the last two years.

    “You can even deposit in a bank and get maybe less 1 per cent but it is far less risky than giving it out as loans to underqualified homeowners.

    “EPF should be seeking out better returns with more aggressive investments rather than just playing a secondary role,” he said.

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    7 comments

    • Aris
      Aris  •  Kuala Lumpur, Kuala Lumpur  •  3 months ago
      The EPF is more like a financial institution in its own right. It should remain so. MTUC’s suggestion while well intended may not be in the best interest of EPF members. EPF should continue lending by following best industry practice that ensures minimum risk and maximum returns for its investments.
      The Question -why should EPF agree to give the government a soft loan of RM1.5 billion to help the general public acquire homes when all our commercial banks are eagerly waiting to provide loans for the same purpose?
      Why should EPF part with its funds on more favourable terms to the general public than the banks? Or conversely why can’t EPF lend the money at the same term as the bank?
      If EPF goes ahead with the proposed loan disbursement it will be putting members’ hard earned savings at risk. PMs come and go. We can’t hold them answerable for the screw ups of the EPF board. EPF’s primary duty is to its MEMBERS. MTUC must apply appropriate pressure to ensure members’ monies remain protected at all times.
    • 6 years old
      6 years old  •  3 months ago
      Dividen/Bonus Bank Rakyat 15% selama 10 tahun berturut-turut. Dividen/Bonus Lembaga Tabung Angkatan Tentera 2010- 14% ( 09 -14%,08 & 07 -16%,06 & 05-15% and 04- 15.75%). Simpanan EPF 400 ++billion,2010 div hanya 5.8% (09-5.65% n 08-4.5%)
      Nape lemah sgt KWSP and sape salah guna duit. Lari dari objective pasai ape? Tak amanah jaga duit orang ramai berdosa besaq. Mati kubur berasap baru tau. Jadi pontianak pulak lagi, sape yang susah. Fikir-fikirkan lah.
      • AnakM'sia
        AnakM'sia 3 months ago
        I believed most of the high return funds you mentioned are limited to certain groups of people, seems pretty clear that political interest is in at play here. The same happened when the government finally released amanah sham that's open to non-bumi, the return is much lower compared with the initial amanah saham available only to bumis. We are short changed, obviously. Let's kick out BeEnd in coming GE!
    • Simon
      Simon  •  Kuala Lumpur, Kuala Lumpur  •  3 months ago
      EPF should build houses. I am sure EPF contributors, esp. those who don't own a house, will be just too happy to use their contributions to purchase a house.
    • 1 Malaysia
      1 Malaysia  •  Kuala Lumpur, Kuala Lumpur  •  3 months ago
      Stop using our hard earned money for your own interest lah EPF.
    • Tim
      Tim  •  Kuala Lumpur, Kuala Lumpur  •  3 months ago
      If you don't know where to invest try Warren Buffet then we would be enjoying not only the mere 5% or less and then you claim that is some big gain. The fact is that you don't know how to invest properly.
    • Jayendran
      Jayendran  •  Kuala Lumpur, Kuala Lumpur  •  3 months ago
      What nonsense are these people talking about? EPF is a giant and can dominate our commercial sector. Hell, it can even buy out Maxis, Astro and all the toll concessionaires in one go. So it should not "compete" in local markets but instead go earn foreign exchange. One way is by acquiring foreign businesses and transfer back technology as well.
      • AnakM'sia
        AnakM'sia 3 months ago
        Why don't you look at the matter in a more positive way? EPF's enagement in certain trades can help to break monopoly and promote healthier market. Technology can be imported more directly by hiring overseas experts, whether the technology transfer will succeed or not depends on many other factors such as the ability and attitude of local people. By investing such huge fund in overseas, you are not only depriving the local people of job opportunities, you are also hurting the country's balance of payment, resulting in huge outflow of RM to overseas. Investment in overseas should be done only when the business/trade concerned has already achieved full capacity in Msia. Look at what happened in US, all the big corp rush to invest in China, resulting in the enormous job lost to the locals. The US corp made tons of profits, but what happened to their economy?
      • AnakM'sia
        AnakM'sia 3 months ago
        I don't agreed that EPF should directly run business on its own, but it would better serve it's member by joining partnership with established and successful business partner. EPF doing it's own business would be too risky, huge financial backing does not guaranteed success or even profit, look at Proton & MAS, they were backed by the government, so what? It only means more money to be wasted by non-competent CEO appointed by the gomen.
      • Jayendran
        Jayendran 3 months ago
        Competent people can be hired for $$$. You can own a profitable business by yet not run it. How do you think entities like banks function? The Mainland Chinese are in an acquisition frenzy. Why? Because the are cash rich. Of course, the EPF could be used to prop up local markets but who needs induced bubbles? There are loads of good business deals abroad. Why do you think they are acquiring foreign property? But these politicians are itching and spend sleepless night thinking about all the cash in EPF and want to meddle with it.
    • AnakM'sia
      AnakM'sia  •  Kuala Lumpur, Kuala Lumpur  •  3 months ago
      EPF members are being short-changed, we should not be satisfied with a meager 5.5% for this high risk housing loan when the current BLR (base Lending Rate) is over 6.6%. Further, with such enormous fund gathered from all contributors, EPF can easily gets into partnership with reputable developers to generate greater return for the members. We're not talking about some small development project, with such huge financing capabilities, the EPF partnership can engage in development of huge housing/commercial project. The current meager yearly return on EPF is barely enough to compensate the inflation, it's simply not enough for retirement for most low-wage members.
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