KUALA LUMPUR, Sept 16 ― The Employees’ Provident Fund’s planned additional investments of up to US$4 billion (RM17 billion) in the US will not breach the Finance Ministry’s own rules, ruling coalition Barisan Nasional said today.
Eric See-To, BN strategic communications deputy director, criticised PKR MP Rafizi Ramli’s claim yesterday that the additional US$4 billion would breach the 30 per cent limit on the amount of EPF’s funds that can be invested in foreign assets as it was already nearing the investment limit this year.
See-To however argued that EPF’s professional fund managers would conduct their own due diligence before making investments, adding that they would decide on the timing and amount of their investments in the US based on their existing guidelines and policies.
“Secondly, the EPF can always re-allocate their existing foreign investments ― for example, shifting assets from the United Kingdom or Singapore to the USA, which will keep the 30 per cent limit intact,” he said in a statement today, noting that it was a normal practice for any fund manager to reallocate investments.
See-To also noted that EPF’s investment assets had experienced a “strong growth” in value from RM636 billion at the end of 2014 to RM760 billion at the end of June 2017.
“When EPF’s total investment assets grow, so too does the value of the funds within the 30 per cent limit,” he said.
“Assuming exchange rates do not change for calculation purposes, a US$4 billion or RM16.8 billion increase in investment translates to just a RM56 billion increase in EPF’s total assets ― which is well within the EPF’s current rate of increase,” he also said, adding that the private retirement fund’s total assets had grew by RM28.67 billion alone in a six-month period from December 2016 to June 2017.
“For him to attack the Prime Minister over a non-existing breach shows that Rafizi has shallow understanding that EPF can re-allocate assets or that its assets base continues to grow strongly,” he said.
See-To also highlighted that the EPF had in the last few years mentioned that several times that its overseas investments had outperformed its investments locally and contributed to higher dividends for EPF contributors.
He also argued that it was not wrong for the EPF to invest in the US, as other global funds such as Japan’s pension funds, the Norway sovereign fund and Singapore’s Temasek and GIC funds were heavily invested there.
On Wednesday, Prime Minister Datuk Seri Najib Razak had during a working visit to meet US president Donald Trump announced that the EPF had invested close to US$7 billion in equity in the US and intends to invest another US$3 billion to US$ 4 billion there.
On Thursday, Najib was reported dismissing allegations by opposition politicians that EPF’s investments abroad would be capital flight, saying that there has been “healthy returns” from the overseas investments.
“EPF is very prudent and the US$6 billion (RM25.2 billion) invested in the US have contributed much to the dividends paid back to the contributors’ accounts,” he had said.