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AWSJ: MTUC Criticizes EPF's Time dotCom Investment
By Cris Prystay

12/4/2001 3:19 am Thu

[MTUC sudah tidak mampu berdiam lagi membiarkan wang KWSP diperjudikan sesuka hati. Ia mahu menganjurkan piket untuk membantah penglibatan KWSP dalam IPO saham time dotCom yang menyebabkan kerugian RM110 juta di atas kertas sahaja walaupun ramai analis sangsi ia berdaya maju.

MTUC juga mahu memprotes penurunan potongan 2% lagi oleh kerajaan baru-baru ini kerana cadangan itu sudahpun ditolak mentah besar oleh MTUC tahun lalu. MTUC juga kecewa dividen KWSP sebanyak 6% pada fiskal 2000 adalah yang paling rendah sejak 26 tahun lalu.

Jika piket ini berjaya - Mahathir dan Daim dijangka akan bermuram durja di sepanjang musim Perhimpunan Agung Umno kerana bimbang diserang tanpa hentinya.

The Asian Wall Street Journal
11th April 2001

Malaysia's Biggest Trade Union Criticizes Pension Fund's Time dotCom Investment



KUALA LUMPUR, Malaysia -- In an unprecedented move, Malaysia's largest trade union organization has criticized government management of the country's national pension fund and is urging its members to picket the fund's offices next month in protest.

The Malaysian Trade Union Congress is particularly angry at the state-run Employees Provident Fund's 269 million ringgit ($70.8 million) investment in an initial public offering by Time dotCom Bhd., a company controlled by the Renong Bhd. conglomerate, which has historic links to Malaysia's dominant political party. The controversial offering was shunned by independent investors and was 75% undersubscribed. Time dotCom's stock price has slumped 40% since the IPO, leaving EPF with a paper loss of about 110 million ringgit on the investment.

"We decided enough is enough," said G. Rajasekeran, secretary general of the MTUC, which represents 230 unions with 550,000 members across the country. Almost 10 million salaried Malaysians must contribute 9% of their paychecks to the EPF, while employers chip in the equivalent of 12% of each workers' salary. The EPF manages about 181 billion ringgit in funds, most of which are invested in government securities, Malaysian equities and property. The fund also lends money to corporations.

Demanding Accountability

This week, the MTUC joined the opposition Democratic Action Party to form an EPF contributors' association to demand greater accountability and transparency from the EPF's investment panel, which is dominated by government finance officials. Mr. Rajasekeran is chairman of the new group, which will be managed by a committee that includes three executives of the Federation of Malaysian Consumers Associations and Syed Sharir, who heads the National Union of Transport Equipment and the Allied Industry Employee's Union.

The MTUC's call for public protests against the EPF is unusual in Malaysia, where labor activism is muted and unions traditionally have had little political clout. The new activism by consumer and union groups signals that anger over perceived government bailouts of politically influential companies has spread beyond partisan politics. The Time dotCom purchase has drawn heavy fire from opposition politicians, but Mr. Rajasekeran says a groundswell of public discontent prompted the MTUC to weigh in.

"Some say we are very docile. We see it as acting responsibly," said Mr. Rajasekeran in an interview. "But we need to be responsible also to the people who put us here, not just to one side. We've been thinking too much about being seen as responsible by the government."

Unions are frustrated by what they say is a lack of accountability of the EPF's investment panel, which reports directly to powerful Finance Minister Daim Zainuddin and not to the EPF board. Union representatives hold five of the 18 seats on the EPF's board, but have no say on the investments the pension fund makes, according to Mr. Rajasekaran.

EPF chairman Abdul Halim Ali, in remarks this week, insisted that the fund's investment process is sufficiently transparent. He told reporters Monday that EPF investments are subject to scrutiny by its investment panel and that "all our investments are very carefully deliberated upon and there is nothing wrong with what we are doing."

Another union grievance is a decision by the government to temporarily cut employees' EPF contributions by two percentage points -- to 9% from 11% -- for one year in a bid to increase consumer spending and boost the flagging economy. A proposal for such a cut was unanimously voted down by the EPF board at a meeting last year, Mr. Rajasekaran said. The government is "just showing contempt for the board," he charged.

The Finance Ministry declined to comment on the MTUC complaints about its role in determining the EPF policies and investments. However, Tun Daim has maintained that Time dotCom, which owns Malaysia's largest fiber-optic-cable network, is a good long-term investment. But many independent analysts say the company's IPO price was far too high. The IPO, which raised 1.89 billion ringgit, helped pay the debts of Time dotCom's parent, Time Engineering Bhd., a company controlled by Renong, which was once the investment arm of Prime Minister Mahathir Mohamad's United Malays National Organization.

The Democratic Action Party has tried to organize several marches on EPF offices to protest the Time dotCom IPO investment, but they have attracted few supporters. That may change, union activists contend. "Ordinary Malaysians may not understand what happened with Time dotCom, but they do understand [the drop in] the dividends," said Mr. Sharir of the transport equipment union.

The EPF announced in February that it would give a 6% dividend to the fund's contributors for the fiscal year 2000, the lowest payout in 26 years. The EPF gave higher dividends even during Asia's 1997-98 financial crisis, offering 6.8% in 1999 and 6.7% in both 1998 and 1997.

"What we are saying is that only 25% of Time dotCom's IPO was taken up. The rest of the public was smarter than the EPF," said Mr. Rajasekeran. "If this goes on, if these rescue missions continue, I think the dividend for 2001 will go below 5%. We need more transparency and accountability" from the EPF.

Kumpulan Wang Amanah Pencen, a civil servants pension fund, also bought a 10.8% stake in Time dotCom through its IPO; the value of that stake has decreased by 366.98 million ringgit since. Siva Subramaniam, chairman of CUEPACS, Malaysia's civil servants union, said his union won't comment on the purchase until they meet with KWAP's chairman on April 30.

Curbs on Unions

Political analysts say that while it is notable that unions are growing more vocal over the EPF issue, it's not clear how much public support they can muster for the protests planned for May 12. Only about 12% of Malaysia's labor force is organized in unions. Restrictive Malaysian labor laws prohibit public-sector unions from bargaining over compensation and Kuala Lumpur has blocked the formation of electronics workers' unions that might discourage foreign investment.

"They can provide a sort of representation for workers, and try to speak out on some issues, but by and large, trade unions in Malaysia lack teeth," said P. Ramasamy, a professor of political economy at the National University of Malaysia. "It's interesting that unions are now trying to exert themselves, but they're also having problems of trying to come out of a tradition its long accustomed to. The call for a picket is welcome by many, but it remains to be seen whether the MTUC has the muscle to fight the state."

A small, but boisterous crowd of about 100 people showed up for the inaugural EPF contributors' association meeting on Monday, the first in a series of gatherings to be organized by the Democratic Action Party around the country. The Democratic Action Party says it tried to place paid advertisements in two major local newspapers to publicize the meeting, but neither would accept the ad.

In the end, the group passed out leaflets to inform people about the meeting. "People should know that we entrusted the government to take of the interests of the country, not to abuse it. So many times they've betrayed our trust," said Vincent Pong, a 28-year-old who found his way to the gathering after picking up a flier. Mr. Pong says he doesn't belong to any political party, but plans to join the contributors' association. "People need to get involved."

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