Prime Minister (PM) Datuk Seri Mohd Najib Razak yesterday revealed that Malaysia’s two largest pension funds have invested nearly RM3 billion in 1Malaysia Development Bhd (1MDB).
Najib, who is also the finance minister, said the Retirement Fund Inc (KWAP) had total investment of RM1.52 billion as of March 31 this year while Employees Provident Fund (EPF) had invested RM1.4 billion in 1MDB and its subsidiaries.
“KWAP has investments and holdings in 1MDB and its subsidiaries in Bandar Malaysia Sdn Bhd, 1MDB Energy Ltd, 1MDB Global Investment Ltd and Jimah Energy Ventures Sdn Bhd (JEV),” Najib said in a written parliamentary reply to Pandan MP Rafizi Ramli.
Rafizi had sought an explanation on EPF and KWAP’s investment in 1MDB and its subsidiaries including former subsidiary SRC International Sdn Bhd up to March 2015. Najib said EPF invested RM1.52 billion in 1MDB’s subsidiaries, Panglima Power Sdn Bhd (PPSB) and JEV.
However, the PM said EPF’s investment in PPSB was made in 2003 and JEV in 2005 before both companies were taken over by 1MDB in 2012 and 2014 respectively.
KWAP, which manages pensions for the civil service, is Malaysia’s second-largest pension fund after EPF. The civil service pension fund had come under scrutiny over its RM4 billion government-guaranteed loan to SRC International Sdn Bhd, a former subsidiary of debt-laden 1MDB.
KWAP had also received criticism over reports that it plans to acquire a parcel of land at the Tun Razak Exchange (TRX) financial district at RM2,300 per sq ft. 1MDB Real Estate Sdn Bhd, a wholly owned subsidiary of 1MDB is the developer of TRX.
KWAP had responded by saying it had not made any commitment to purchase a land and a building in TRX.
Meanwhile, Bernama reported EPF CEO Datuk Shahril Ridza Ridzuan as saying the RM200 million 1MDB bond subscribed to by EPF in 2009 is highly secured and there is no risk to EPF.
“It (government guarantee) is the highest form of security,” he said on the sidelines of the International Social Security Conference 2015 in Kuala Lumpur yesterday.
Source : The Malaysian Reserve
EPF investment in 1MDB guaranteed by Government
The RM200 million 1Malaysia Development Bhd (1MDB) bond subscribed to by the Employees Provident Fund (EPF) in 2009 is not risky as it is guaranteed by the government, said EPF CEO Datuk Shahril Ridza Ridzuan.
He said the bond is highly secured and there is no risk to EPF’s investment.
“It (government guarantee) is the highest form of security,” he said on the sidelines of the International Social Security Conference 2015 here today.
He said EPF puts the same confidence in its exposure totalling RM1.52 billion in 1MDB subsidiaries Panglima Power Sdn Bhd (PPSB) and Jimah Energy Ventures Sdn Bhd.
Shahril said the exposure is from EPF’s involvement in funding the two power plants through straightforward infrastructure bonds in 2003 and 2005 respectively, before 1MDB took over the companies in 2012 and last year.
“The investments in the two power plants are fully ring-fenced as the credit of the underlying assets is very solid.
“We shall secure against the power plant assets as well as the cash flow from the sale of energy.
“Cash flow generated from the power plants will be used to settle the debt first before paying any kind of dividend to shareholders,” he added.
Meanwhile, Shahril said following the conclusion of EPF’s scheme improvement initiatives poll yesterday, EPF will bring up the findings to the Finance Ministry to seek the best way to implement the scheme.
He said the polling results showed overwhelming response from members for the new initiatives and EPF would try to implement them as soon as possible.
“The initiatives are important to protect the retirement future of the members, so the faster we can do it, the better,” he added.
In the survey, 94.4 percent of 96,448 respondents wanted full withdrawal of funds to remain at age 55 and also for new contributions made between the ages of 55 and 60 to be withdrawn at age 60.
The survey also saw 74.6 percent of members agreeing to the proposal that EPF contributions be based on wages stipulated by minimum wage legislation, and 61.3 percent supported the initiative to extend dividend payments from age 75 to 100.
Seventy-one percent of respondents also agreed with the proposal to allow members to switch to a Shariah-compliant retirement savings from the existing retirement savings scheme.
On other developments, Shahril said he is not aware of any proposal to merge EPF’s 65 percent-owned unit Malaysia Building Society Bhd with Kuwait Finance House (M) Bhd.
He also denied any knowledge regarding Bank Negara Malaysia’s (BNM) intention to pull out its representative from the fund’s board of directors.
“As far as we are concerned, we are not aware of any changes on the EPF side. That is something you need to ask BNM and the Ministry of Finance,” he added.
Deputy Finance Minister Datuk Chua Tee Yong in in his winding up speech on the Retirement Fund (Amendment) Bill 2015 in Parliament said BNM requested to pull out its representatives from the Social Security Organisation (Socso) and EPF.
Chua said the central bank’s move comes after the government’s tabling of a proposed amendment to the Retirement Fund Act 2007 in Parliament recently, which will see the removal of BNM’s sole representative from Kumpulan Wang Persaraan Diperbadankan (KWAP), also known as the Retirement Fund Inc.
He added that the removal was also on BNM’s request to avoid a conflict of interest, due to the fact that it is a regulator and hence should not be involved in KWAP’s investments.
Themed “Sustainable Social Security Ecosystem within an Ageing Society”, the two-day conference beginning today was jointly organised by EPF and JP Morgan Asset Management, and garnered about 400 participants.
Source : Astro Awani
Putrajaya will honour all 1MDB debt papers
Finance Minister Lim Guan Eng yesterday gave the assurance that Putrajaya will honour all 1Malaysia Development Bhd (1MDB)-related debt papers, in particular those in the hands of statutory bodies like the Employees Provident Fund (EPF) and the Retiremennt Fund Inc (KWAP).
He said this when asked to confirm whether there is a plan to convert 1MDB-related debt papers held by KWAP and Lembaga Tabung Haji into equity stakes in the Bandar Malaysia development project.
“I just want to say that any bond or loan provided by (the) EPF and KWAP related to 1MDB are guaranteed by the Ministry of Finance (MoF), on behalf of the government,” he told reporters yesterday, without confirming or denying that the proposal is on the table.
“Their loans are secured 100%. There is nothing to worry about. The one who should be worried is MoF and the government, because we guaranteed their loans. The government needs to find money to pay all these loans related to 1MDB, which we get nothing in return in terms of value,” Guan Eng said.
He had expressed a similar commitment last May, when he said Malaysia would honour all payments on debts raised by 1MDB, even though the new government was unhappy about money missing from the fund.
On Monday, The Edge Financial Daily reported that to reduce 1MDB’s debt burden, the government is proposing that the RM2.4 billion bonds held by KWAP and Tabung Haji currently be converted into equity stakes in the Bandar Malaysia project.
Meanwhile, on allegations by blogger Raja Petra Kamarudin saying that the government agreed to give 4,500 acres (1,821ha) adjacent to the East Coast Rail Link (ECRL) stations in exchange for a RM21.5 billion discount in construction cost, Guan Eng said he is not privy to the details of agreements related to the ECRL.
“I have not been informed about the 4,500 acres given for free, I don’t think that is correct, wait for the official contract details to be revealed,” he said.
Bombardier commits to RM700.7m local contents in Kelana Jaya LRT contracts
Guan Eng, meanwhile, revealed that Bombardier Hartasuma Consortium, the train set supplier for Prasarana Malaysia Bhd’s Kelana Jaya light rail transit (LRT) line, has committed to make use of an estimated RM700.7 million worth of local contents in delivering its RM2.7 billion contracts under the project.
This is based on its commitment to maximise the use of local contents to up to 35% in the delivery of the RM1.7 billion contract it secured in 2017 to deliver 27 new train sets for the project which is estimated at RM600 million.
This is on top of its agreement to extend the existing local supplier base by using components and services offered by 14 local companies, valued at RM100.7 million, in undertaking another RM473 million refurbishment job on the Kelana Jaya LRT’s existing train sets.
These commitments come under the government’s Industrial Collaboration Programme (ICP), a policy that applies to all government procurements that exceed certain thresholds; namely above RM50 million for contracts awarded to foreign companies, and above RM100 million for contracts awarded to local ones.
Once triggered, the ICP policy requires procurement vendors to make commitment in the forms of technology transfer, industrial training, global market access, development of local supply chain, the usage of local content and etc.
Guan Eng said priority is given to activities that contribute to the national aspiration towards achieving the status of developed country.
Source : The Edge