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Call on Cabinet tomorrow to classify the 4.25 per cent EPF dividend for last year as provisional dividend and commission an independent study why EPF could not give a final dividend of more than 5% when last year’s economic growth of 4.2 per cent was higher than 0.4 per cent for 2001Media Conference Statement - DAP protest over the lowest EPF dividend in 40 years at the EPF Headquarters by Lim Kit Siang (Kuala Lumpur, Tuesday): The Cabinet tomorrow should intervene in the scandal and outrage of the lowest Employees Provident Fund (EPF) dividend in 40 years with the declaration of 4.25 per cent for last year, by classifying it as provisional dividend and commission an independent and comprehensive study as to why EPF could not give a final dividend of more than 5% declared for 2001 when the country had registered a higher economic growth of 4.2 per cent last year as compared to 0.4 per cent for 2001. The Cabinet is now the final authority in the country which can step in to rectify the gross injustice to the 10.3 million EPF contributors, as the argument that the 4.25 per cent EPF dividend for last year was the best possible under the circumstances cannot bear public scrutiny and therefore unacceptable. While DAP accepts the adverse circumstances faced by EPF because of the difficult investment environment and a low interest rate regime, we cannot accept the 4.25 per cent EPF dividend for last year and less than 4 per cent expected for this year, as EPF is capable of declaring higher dividends if not for mismanagement, whether in equity investments or loans disbursements, resulting in losses running into billions and even tens of billions of ringgit. The clearest example is that if EPF did not have to set aside RM2.14 billion for “paper losses” in equity last year and this amount could be used for the declaration of dividend, the 10.3 million EPF contributors would be able to get a dividend of at least 5.43 per cent – higher than the 5 per cent dividend for 2001. In fact, the EPF dividend for 2001 should be at least 5.7 per cent instead of 5 per cent if not for the provision of RM1.19 billion for “paper losses” in equity – which have now to be paid in hard-earned cash from the life-savings of the 10.3 million EPF contributors, in terms of lower dividends. EPF has neither clarified nor denied recent reports that “it is now sitting on RM10 billion worth of paper losses”, and it has still to explain how their write-off would depress the EPF dividends for the next few years, completely unrelated to problems of “difficult investment environment and a low interest rate regime”. It is the misfortune of Malaysian workers and trade unions that there are trade union leaders who fit the saying “kachang lupa kulit”, whose first instinct is to side with the authorities against the workers totally forgetting their beginnings, responsibilities and positions. The statement by the Cuepacs secretary-general Datuk Abdul Rahman Manan in Kuching on Saturday calling on the EPF contributors “to accept with an open heart” the 4.25 per cent dividend, because it is “reasonable” considering the adverse economic consequences wrought by the Iraq war and SARS, is most shocking and outrageous. In the first place, both the Iraq war and SARS have nothing to do with the EPF dividend for last year, as both these events would only have a bearing on the EPF dividend for this year. If the Cuepacs secretary-general is representative of the trade union leaders in the country, how can workers and the EPF contributors have confidence and trust that trade union leaders would defend their basic rights and interest, including have a fair and just EPF dividend? CUEPACS owes not only its affiliate unions and members but the 10.3 million EPF contributors and the general public a full explanation as to its stand on the lowest EPF dividend in 40 years. It is shocking that there are those in high places who defend the 4.25 EPF dividend on the ground that it is higher than interest from fixed deposit in banks. If this is the rationale and yardstick to measure the performance of EPF management and investments, why should the EPF spend hundreds of millions of ringgit every year in annual operating costs, incurring lavish expenditures to engage consultants on investments strategies and risk managements? When EPF celebrated its 50th anniversary in 2001, the EPF Chairman Tan Sri Abdul Halim Ali, expressed concern at the low average savings of EPF members. He said that the savings profile of active EPF members aged 54 years showed that the average savings of an EPF member in 2001 was only RM77,272 – for male RM89,656 and female RM46,103. He attributed the low balance to the “low wages, contribution and dividend rates in the 1960s and 1970s as well as pre-retirement withdrawals of the savings by members”. Ironically, the dividends of the first three years of the new decade is already lower than the dividends in the first three years of the 1970s – i.e. 6 per cent for 2,000, 5 per cent for 2001 and 4.25 per cent for 2002 averaging 5.08 per cent as compared to 5.75 per cent in 1970, 5.8 per cent for 1971 and 5.85 per cent for 1972 averaging 5.8 per cent. What should be most disturbing is that the EPF dividend for the coming years will be heading for new lows (MTUC President and a EPF Board member Zainal Rampak has said that he had been told by the EPF that the dividend this year would be less than 4 per cent and that he is worried that EPF would soon be scraping the statutory minimum of 2.5 per cent dividend), when in the rest of the 1970s, the EPF dividend registered an upward climb from 6.6 per cent for 1974-1975, 7 per cent for 1976-1978, 7.25 per cent for 1979 and 8 per cent for 1980. In 1998, when the EPF dividend was 6.8 per cent, EPF operating expenditures were RM194 million. By 2001, EPF operating expenditures had shot up 80 per cent to RM350 million while the EPF dividend had plunged by over 26 per cent to 5 per cent – and now to 4.25 per cent. How can EPF account for such a dismal record of management and performance to the 10.3 million EPF contributors? (22/4/2003) * Lim Kit Siang, DAP National Chairman |