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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
Malaysia's Biggest Trade Union Criticizes
Pension Fund's Time dotCom Investment
By CRIS PRYSTAY
Staff Reporter of THE WALL STREET JOURNAL
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
"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
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.
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
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
"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
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
"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."
Write to Cris Prystay at email@example.com