Dangers of Bleeding Banks and EPF

 

A Kadir Jasin

 

بِسْمِ اللهِ الرَّحْمنِ الرَّحِيمِ

 

1. Some of the people who are today riding on the loan moratorium and EPF withdrawal bandwagons for cheap publicity, are the very same people who plunged the country into indebtedness. When Covid-19 struck and the economy nosedived, the indebted people are among the most vulnerable.

 

2. It's easy to issue media statements or make social media postings condemning banks for not extending loan repayment moratorium and wanting the EPF to allow unlimited withdrawals by contributors.

 

2. True that the economy is yet to recover since the moratorium was enforced by the Perikatan Nasional (PN) government on last April 1, its effects on the banks and investment funds cannot also be ignored.

 

3. As was announced by Finance Minister, Tengku Zafrul Abdul Aziz, on August 11, the amount involved was estimated at RM66.6 billion as of last July 31. And when the general moratorium ended on Sept 30, the understanding is the banking institutions would continue "to be facilitative" in assisting borrowers through the extended moratorium and targeted assistance.

 

4. While it may be true that banks can withstand the losses due to the moratorium, but investors who hold their stocks and shares will suffer instead. Prices of banking stocks had tumbled since the enforcement of the moratorium.

 

5. Banks are some of the biggest and most profitable counters on Bursa Malaysia and large government-linked investment companies (GLICs) are among their key investors. Losses by the banks in both profitability and market capitalisation will have negative impact on the profitability such GLICs as EPF, PNB, Khazanah, KWAP, Tabung Haji and the LTAT.

 

6. Hopefully, the "ciput" 4.25-percent return to Amanah Saham Bumiputera (ASB) unit holders announced by the PNB on 23 December would not be a preview of the bad things to come when the EPF and other investment companies in the public and private sectors announce their 2020 dividends.

 

7. Back to the pontificators who condemned banks for allegedly being harsh on borrowers, they should perhaps look at themselves in the mirror. For instance, who instructed the EPF to lend RM25.29 billion to the Finance Ministry-owned Pembinaan PFI Berhad and dumped on the people the 1MDB debt in excess of RM50 billion?

 

8. How do we expect EPF contributors to benefit from the massive loan to PFI when it is paid only 0.5 percent interest? Furthermore, the loan tenure had since been extended from five to 15 years - expiring 2027 - according to a report to the Parliament.

 

9. PFI was the product of the Abdullah Ahmad Badawi's era while the 1MDB and SRC International Sdn Bhd were the legacies of Mohd Najib Abdul Razak.

 

10. If the EPF contributors are allowed to withdraw their savings at will, as suggested by these popularity seekers, the pension fund will have to sell billions upon billions of investments to raise cash to pay them. This will depress share prices and may even force it to sell its assets at a loss. In time, it may not even have enough capital to generate meaningful returns to the remaining contributors. This was how many such funds around the world went bankrupt.

 

11. Sadly because many Malaysians are uninformed or are just too lazy to think, these liars and hypocrites have a field day misleading them.

 

Thank you.

 

Footnote: This article was published in my Facebook this morning but was later blocked by Facebook.