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DAP Central Executive Committee will meet on Sunday on the MTUC picket to protest against lowest dividend on May 21  and study the critique of former EPF Investment Panel Dr. Thillainathan on unsatisfactorfy management of  EPF and  mal-governance

Media Statement
by Lim Kit Siang

(Petaling Jaya,  Friday): The statement by the CUEPACS President, Datuk N. Siva Subramaniam in the New Straits Times today  expressing support for the lowest EPF dividend for 40 years at 4.25 per cent last year and  his disagreement with the MTUC decision to picket against the EPF dividend on 21st May is most surprising as they are at odds with what he said at the DAP public forum on “Lowest dividend in 40 years – The future of EPF” on Monday. 

At the forum, Siva said twice that he was against the lowest EPF dividend in 40 years –  in contrast to his statement in the NST that it was “not right” for MTUC  to ask for a dividend that did not take into account the sluggish world economy.

Siva had  neither  demurred nor objected  when I said that EPF owes the duty of accountability and transparency to the 10.3 million EPF contributors on many fundamental issues of EPF management and investment, such as:

  • why  EPF had to set aside RM2.14 billion for “paper losses” in equity last year  which could have  been used to declare a higher EPF dividend of at least 5.43 per cent instead of 4.25 per cent;
  • why EPF had to write off over RM5 billion  for “paper losses” in equity and doubtful debts in the five years from 1998 to 2002, and is still sitting  on over RM10 billion “paper losses” in equity  (or RM14 billion according to the MTUC secretary-general  G. Rajasekaran at the forum) which  will force the further reduction of the EPF dividend in the coming years;
  • why EPF had failed to keep its administrative costs low and under firm control to ensure reasonable returns for the EPF contributors, as illustrated by the annual operating costs of EPF shooting  up 80 per cent from RM194 million in 1998 to RM350 million in 2001, when the EPF dividend had plunged by over 26 per cent from 6.8 per cent to 5 per cent for this period – and now to an even lower 4.25 per cent for last year;
  • why the doubling of EPF  administrative costs have not been accompanied by  greater efficiency, better performance  or improved  quality of service;  for example: the 2001 EPF  Report promised that EPF contributors would be able to check their account balance online from the EPF website latest by the end of last year, but  there is no sign of any such online service in the second quarter of 2003, putting the  EPF at least five years behind Singapore’s Central Provident Fund in this regard; and

the sharp critique by veteran EPF insider who served for a decade on the EPF Investment Panel until 2001, Dr. R. Thillainathan, on the EPF’s “mal-governance” and his verdict that EPF’s performance as a retirement scheme is “not satisfactory”.

Expressing disagreement with the MTUC call for a picket against the lowest EPF  dividend in 40 years, Siva told NST: “We also do not want  opposition parties to get involved with workers’ issues. This makes it complicated because there are some who have said they are also going to picket.”

This is most surprising for at least  two reasons.  Firstly, is Siva suggesting that opposition parties  and  organizations apart from trade unions have no right or business to be concerned about the lowest EPF dividend in 40 years?

If Siva wants to question the right of the opposition to be concerned about the lowest dividend in 40 years, he should ask himself as to what  right and basis he was appointed to the EPF Board.

As CUEPACS President, he represents the minority of minority of the 10.3 million EPF contributors. Let us look at the following salient facts::

  1. Active contributors of the EPF account for 52% of the labour force. Government pension scheme covers another 6.2 per cent of labour force. This means that 42% of Malaysia’s labour force is not covered by a retirement scheme.

  2. Less than 10 per cent of the labour force are unionized, or there are less than 800,000 trade union members out of a total labour force of over nine million workers. 

  3. The MTUC has a membership of some 550,000 members, while CUEPACS have significantly less membership, the overwhelming majority of whom are not EPF contributors.

  4. As there are 10.3 million EPF contributors, this means that the CUEPACS President cannot claim  direct representation of more than 0.1 per cent of the total of 10.3  million EPF contributors.  Does this give Siva the right not only to speak on behalf of 10.3 million EPF contributors but to sit on the EPF Board to represent them and to agree to the lowest EPF dividend in 40 years? Siva should be seeking representation on the Pension Trust Fund instead of EPF.

  5. As the five trade union leaders on the EPF Board represent less than five per cent of the 10.3 million EPF contributors, over 95% of the EPF contributors are not represented on the EPF Board to protect their interests.

The second objection to Siva’s disparaging reference to the Opposition was his tacit support of the consensus at Monday’s forum that all political parties (whether government or opposition), trade unions, NGOs, consumer groups and concerned Malaysians  should  join forces to mobilize  public opinion to demand greater EPF accountability and transparency of its management and investment polices and   performance.

In fact,  at the forum Rajasekaran  invited  all political parties and organizations to support the MTUC’s  nation-wide picket against the 4.25 per cent EPF  dividend declared for 2002 on the ground that this is an issue which does not just concern trade unions and their members, but all 10.3 million EPF contributors – and Rajasekaran is right  as over 95 per cent of the 10.3 million EPF contributors are not MTUC members. 

There was no murmur of objection from Siva, and his public objection yesterday  to the MTUC picket and the possible involvement of the opposition have raised eyebrows as to what caused his change of position in a matter of three days.

DAP Central Executive Committee will meet on Sunday on the MTUC picket to protest against lowest dividend on May 21.  DAP supports MTUC picket against the lowest EPF dividend in 40 years, although we are very critical of the role of the MTUC President, Senator Datuk Zainal Rampak, in his double failure to attend the important EPF Board meeting which decided on the 4.25 per cent dividend and to give acceptable explanation for his absence from the important EPF Board meeting. 

However, while DAP supports the MTUC  nation-wide picket against the 4.25 per cent  EPF dividend on May 21, we do not want to be accused of hijacking and “politicizing” the MTUC picket by Siva and others. 

The DAP CEC will also study the important and sharp critique of EPF by  former long-standing  EPF Investment Panel member  Dr. Thillainathan on the  unsatisfactory EPF management and  mal-governance, and in particular, on EPF’s multiple failures, viz:

  • EPF management practices with regard to accounting, performance measurement and dividends declared depart from private sector best practices;
  • Failure to run EPF in the best interest only of its members;
  • Serious EPF governance issues, as  EPF Board and Investment Panel members not adequately qualified; EPF contributors have no powers to discipline the governing boards;  conflict of interest in the weak  EPF governance structure, given the regulator (Ministry of Finance) and the regulated (EPF) are government bodies, etc.

(2/5/2003)

* Lim Kit Siang, DAP National Chairman