EPF Employee Representative Board Members Must Reject Low-Cost Housing Loan Scheme

We welcome the statement by the Malaysian Trade Union Congress (MTUC) Secretary-General, Abdul Halim Mansor who objected to the plan by EPF to extend RM1.5 billion in loans to low-cost housing purchasers in Kuala Lumpur who failed to secure financing from commercial banks as reported in The Malaysian Insider yesterday.

It is clear that the loan scheme is in breach of EPF Act 1991 which has no provisions for EPF to extend loans to individuals with the low-cost housing units as a collateral.  The EPF may lend funds to federal and state governments, to corporate bodies or even to its members subject to terms and conditions under Clause 26 which defines the “power of the Board to invest”.

The attempt by the Federal Government to turn EPF into a lender of last resort for social welfare programmes will also set a bad precedent for the fund being abused politically to win votes in the future.  While the Prime Minister, Datuk Seri Najib Razak has tried to play down the scheme by claiming that the RM1.5 billion loan is only a fraction of EPF fund size, but if approved, the scheme could well be expanded and extended to other states in the country.

The EPF on its website says that it "aims to provide financial security for its members’ retirement purposes. The fund is committed to preserving and growing the savings of its members in a prudent manner in accordance with best practices in investments and corporate conduct.”  Hence the workers’ retirement funds must not be exploited and risked in a low-cost housing programme for those with extremely poor credit ratings.

Hence we call upon the MTUC to take an official position to strongly object to the abuse of EPF funds in the EPF Board where the former is represented.  Encik Mohd Khalid Atan, the President of MTUC sits on the EPF Board with 3 other members as representatives of employees.  The others are Loke Yim Pheng, Secretary-General of the National Union of Teaching Profession (NUTP), Hadiah Leen, President of Sarawak Bank Employees Union (SBEU) and Azlin Awang Chee, General Secretary of the Sabah Commercial Employees Union (SCEU).

The representatives must voice their objections to the low-cost housing loan scheme which will put at risk Malaysian workers’ savings and is in breach of the EPF Act.

We also call upon the “Professional Representatives” sitting on the EPF Board to uphold public interest by calling for the scheme to be reviewed.  The 3 professional representatives are Tan Sri Lee Lam Thye, Heng Hock Cheng and Halim Hj Din.

The EPF Board of Directors must exercise their powers in the interest of the contributors, above any other interested parties, including the Federal Government.  The Directors must insist that any loans in this case, must be extended directly to the Federal Government and not to the individual low-cost house purchasers.  It is for the Federal Government to bear the responsibility of social welfare by providing a roof over the head of all Malaysians, and not the responsibility of the EPF.

We fully support measures by the Government to assist the poor to own their own properties. However such measures cannot be at the expense of abusing Malaysian workers' retirement savings as specifically outlined in the EPF Act.