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Sakmongkol ak 47

ariff.sabri@gmail.com

Wednesday, 22 October 2008

The EPF Caper

A well known blogger, Lawyer Kampung has written about his misgivings about the application of the EPF money. Recently the DPM who is also the Minister of Finance 1 announced that EPF will lend RM5 billion to one of Khazanah’s company. Value Cap Sdn Bhd.

His article has generated many comments. Unfortunately, many went off tangent as several comments degenerated into a racial blamegame. Sakmongkol will not dignify the comments by answering those bigoted hotheads.

The main issue is about the application of the EPF funds.

Let’s see.

Sakmongkol also wants to know, whether the loan application and processing were done properly like that normally and as a rule, expected from an application from the public from a bank. If the manner of applying and approving are done in a lackadaisical manner, this is a cause for concern.

Hopefully everything was done in order.

Lawyer kampung has rightly asked- where will the funds be applied to? Is this another ruse to use EPF money to save politically related counters? Valuecap is to use the money to invest in undervalued stocks and protect investments in government-owned companies.

Which leads Sakmongkol to ask; isn’t EPF is all about investing? It has its cadre of investment analysts right?- surely they too can identify the good counters. By law, EPF guarantees a return of 2.5% of our money. Based on this, EPF has not done that bad. Our principal remain intact and the returns, fortunately have been above the minimum guaranteed of 2.5%. .

The EPF applies our funds to investments in companies deemed profitable and permissible by the organization, from which dividends are banked to respective members' accounts. Alternately, members may use their EPF savings in their own investments, although such activities are not covered by the EPF and the members are to bear any losses made.

What has been the record by EPF?

year

1999

2000

2001

2002

2003

2004

2005

2006

2007

Returns(%)

6.84

6.00

5.00

4.25

4.5

4.75

5.0

5.15

5.8





























Why are the returns nothing to shout about? Meaning when compared to Singapore’s temasek for example or PNB for instance. Because, the EPF claims that the lowered dividend is the result of its decision to invest in low-risk fixed revenue instruments, which produce lower returns but maintains the principal value of its members' contributions. This is due to the EPF primarily aimed at providing a stable financial security of its members. Sakmongkol has no quarrel about this conservatism

But why valuecap Sdn Bhd? Because says the government:- Govt to inject the proceeds into Valuecap Sdn Bhd to buy undervalued listed companies on portfolio basis based on superior fundamental investment research.

Which makes Sakmongkol asks another question. Why are these undervalued good buys not identified by EPF’s phalanx of analysts? Maybe because, the EPF boys being accustomed to only playing with low-risked therefore lower returns counters haven’t the smarts to dabble with the higher-risk-higher return counters. So, they need to farm out investments into these higher yielding instruments to a better outfit. But let’s disguise this farming out as a loan. Enter Valuecap Sdn Bhd.

Sakmongkol hasn’t got the data on the returns yielded by this Valuecap Sdn Bhd who by implication, MOF2 says is capable of dishing out superior fundamental investment research. Because they are brainy? Because they are Azman Mokhtar’s boys? Level 4 affiliates?

Just suppose the returns on investments by Valuecap are worse than the EPF’s in its worst year, will the government still proceed to give them the loan?

13 comments:

ben,  22 October 2008 at 16:28  

Bro sakmongkol,

I can list a few of "low-risk fixed revenue instruments,"/investments with far better return for our old age :-
1) buy up PLUS (other toll concessionaires as well) (it's very profitable) and make sure that toll collector MD doesn't get RM1.1m of salary pa

2) buy up lopsided IPPs

EPF has the fund to invest in all the above. At least, we know where all the tolls collected and electricity bills paid go to - our old age and nobody will complain!

mekyam,  22 October 2008 at 18:21  

commend you and loyar for highlighting this.

i totally agree with you mr sak. malaysians should really learn not to be sidetracked by the divisive and unprofitable racial squabllings but to keep their eyes instead on real issues affecting them.

omarkhayyam,  22 October 2008 at 20:30  

when a blind leads another they still arrive at their destination

but

when a fool leads another they go never where :)

cheers

chapchai 22 October 2008 at 21:45  

I think the Opposition should cause the Public Accounts Committee to look into this one.

bergen 22 October 2008 at 23:13  

Thank you for visiting. It's nice having you over at Bergentest. Kuantan is a nice place - in the 70s windy and quiet. Now selalu gi Kuantan jumpa orang Gerak Lian kat Tanjung Lumpur. I like Tomoi and AK47 - raw and no nonsense.

Jed Yoong 23 October 2008 at 01:46  

Hi Ariff

I am beginning to smell a rat. A bit late but hey, I am not so suspicious and too trusting for my own good.

Like you mentioned, EPF's job is to invest our $$$ anyway so why do we need Value Cap? I can think of the following possible reasons, some of which may tie in with your questions:

1. EPF's internal investment guidelines are too strict for investment into the "undervalued" counters that Value Cap are eyeing.
2. Pak Lah's faction is trying to siphon some funds out as they have lost Khazanah and hence the power to protect their investments.
3. There is no reason and it's just another meaningless act by the govt to look like its doing something for us while making some side income ie the RM5 bil. Imagine how much u'll make if you hold those now "undervalued" counters which will be bought by Value Cap, the "saviour". Hmmmm, any tips? Air Asia, I hear? Kee Kee. But airlines are a bad idea now. Phew, good thing if Value Cap buys these "undervalued" shares.

Jed Yoong 23 October 2008 at 01:46  

Hi Ariff

I am beginning to smell a rat. A bit late but hey, I am not so suspicious and too trusting for my own good.

Like you mentioned, EPF's job is to invest our $$$ anyway so why do we need Value Cap? I can think of the following possible reasons, some of which may tie in with your questions:

1. EPF's internal investment guidelines are too strict for investment into the "undervalued" counters that Value Cap are eyeing.
2. Pak Lah's faction is trying to siphon some funds out as they have lost Khazanah and hence the power to protect their investments.
3. There is no reason and it's just another meaningless act by the govt to look like its doing something for us while making some side income ie the RM5 bil. Imagine how much u'll make if you hold those now "undervalued" counters which will be bought by Value Cap, the "saviour". Hmmmm, any tips? Air Asia, I hear? Kee Kee. But airlines are a bad idea now. Phew, good thing if Value Cap buys these "undervalued" shares.

ketam 23 October 2008 at 09:26  

Yup i totally agree with you..actually what ValueCap is doing is correct to buy the undervalued share,but what is wrong is that why those in EPF that involving in investment not buying all this shares?/I mean especially the blue chip shares?? Other investment company (unit trust company is going crazy buying all the blue chip company's shares)?? Are they all sleeping??

Mat Cendana 23 October 2008 at 20:27  

It's fortunate (for me) that I've read this post. I'm now kicking myself and feeling very ashamed indeed for being so simple-minded and naive.

You see, right after receiving a SMS Alert from Star about this EPF thing, I had thought, "This is something good being done by the government for the economy". But after reading what you have to say, it's obvious I have to review my initial conclusion.

Keep up this good work, En Ariff! Your insights through the posts here are of extreme value to people like me. I don't know about others but I'm putting on record here that YOU are the single most influential factor when it comes to my understanding and stance on things political and economic.

BTW have not been able to comment here as frequently as I wish due to time constraints. And since I had spent a bit too much time at Mamasita Mamamia!, my allocated time quota which I should have spent here is considered "all used up":-)

sakmongkol AK47 aka Mat Tomoi 23 October 2008 at 20:55  

ben:- yes, the epf boys should step up their analyses on undervalued counters. if the boys from valuecap can do it, they can.
incidentally, that's why i hate MBO. the people from within proposes to buy over the company promising and guaranteeing they can turn in around. when they were emplyees, why coudnt they manage the company properly? why can they after they take over?
mekyam: yes, hair splitting along racial lines will do more harm t our country. fortunately, there are many sane people with cooler heads from all races in malaysia.
jed yoong- i am sure you can be a better investment analyst than i who goes around jotting notes in 555 buku hutang- hehe.
ketam- thank you for visiting.

met cendana- you are too kind with your words. thank you. i just try to be a busybody here and there inviting debates and fishing out for other worthy thoughts. maybe you would like check out people like walla- who doesnt blog but is highly knowledgeable and i sense a very formidable intellect. i am still surprised mek yam hasnt started to blog. you may also check out the brainbox de minimis. he keeps in mentally trim.
and then, those guys at the dandelions are also very good.
yes- they are out there. you too are doing OK.

sakmongkol AK47 aka Mat Tomoi 23 October 2008 at 21:28  

should be;

jed yoong---than i who go around ...instead of goes around- my english teacher will cane me.


de minimis- he keeps me mentally trim instead of he keeps in mentally trim... sigh... sights failing, hand trembling..haha

Lawyer Kampung 24 October 2008 at 18:26  

Wow! Well known blogger? You're too kind bro. Haha

As for those comments, they are actually from the same person-lah, I think. One lunatic bombarding the blogosphere with his/her sick commentaries. Repeating the same racial & degrading remarks. If you are free, have a look at the following links & look for "vesewe, aston, reek, yuking, kon*k, coolooc" whatever (the comment section):

http://tuntelanai.blogspot.com/2008/07/bolehkah-najib-melakukan-amal.html

http://fuziahsalleh2.wordpress.com/2007/10/23/event-of-the-year-bersih-mass-rally-november-10/

http://pemudaenggang.wordpress.com/2008/07/12/tiada-perjanjian-pangkor-ii/

http://sibongkok-wataniah.blogspot.com/2007/11/abdullahs-pandora-box.html?showComment=1196365260000

http://jebatmustdie.wordpress.com/2008/06/17/when-all-else-fail-samy-vellu-whacks-his-former-boss-while-other-umno-leaders-lost-their-balls/

http://jedyoong.wordpress.com/2008/01/31/a-malaysia-boleh-minister-in-heaven/

http://lizzam.blogspot.com/2008/07/post-debate.html

http://ktemoc.blogspot.com/2007/03/parliamentarian-snouts-in-public-trough.html

Mat Cendana 24 October 2008 at 20:28  

@lawyer kampung
I agree with En Ariff's term of "well known blogger" here, when it comes to "Malaysia socio-political blogs".

Maybe "not as well-known as Rocky Bru or Susan Loone", but "known enough". If a Malaysian Internet surfer does not know, then s/he is ignorant of this particular category of bloggers.

This is not being condescending to the said surfer - he has the right NOT to bother about things political when he's on the Net (It's okay to call me "ignorant" when it comes to "Hong Kong entertainments stars" for instance)

You and people like Sakmongkol, Another Brick in The Wall, Demi Negara, Nuraina Samad, Marina Mahathir etc are in what I'd call "First Division" of the above category of bloggers.

The "Premier League Division" are people like the two above, plus Tun Mahathir (but of course), Anwar Ibrahim, Lim Kit Siang and the currently out-of-circulation Raja Petra Kamarudin...

Bloggers like Jeff Ooi and Sheih Kickdefella are somewhere in between these two divisions.

Ah, yes, I know what some of you are thinking: "And who are YOU to be giving these rankings??"

ANSWER: I'm a fun-seeking and self-appointed "appraiser and valuer of blogs and sites" (like "Ratings Agency Malaysia" - RAM); besides someone who likes to "menyibuk" at other people's blogs "to try emulate, expand on or twist their ideas" with my own posts. And quite a number of them had come from this blog especially Haha!

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