KUALA LUMPUR: The Employees Provident Fund (EPF), an RM1 trillion (US$222.2 billion) state investment vehicle, has been asked by the Anwar Ibrahim administration to increase the size of its domestic portfolio in order to spur the Malaysian economy.
This lopsided coverage profile has led to criticism that the EPF has morphed into an investment and savings vehicle for the rich. Senior pension fund executives told CNA that this impression is tough to refute.
EPF’s asset base of over RM1 trillion is larger than all the other government-linked investment corporations, such as government fund management company Permodalan Nasional Bnd , the government pension fund known as KWAP, sovereign wealth fund Khazanah Nasional Bhd and the army pension fund called LTAT, put together.The EPF has been instrumental in Malaysia’s economic development.
The contribution rate for members was reduced from 11 per cent to 9 per cent between April 2001 and March 2002 to deal with the collapse in the technology sector as well as the 9/11 terrorist attack in the United States in 2001. “The strong point for EPF has been its ability to seize on opportunities at home and abroad,” he said, adding that any cap on investment overseas would be disadvantageous for the pension fund.PIVOTING TOWARDS DOMESTIC INVESTMENTS
“EPF is a huge supercarrier and to change direction will take time especially when a six percentage point increase means RM60 billion,” said one senior executive at the pension fund’s portfolio investment division, adding that Mr Anwar's latest request could take at least three years to realise.Sunway University professor Yeah Kim Leng noted that the government needs to introduce new policies to encourage savings.
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