26 Oktober 2008

Let the market dictate its stock prices - Tony Pua

Media Statement by Tony Pua in Petaling Jaya on Tuesday, 21st October 2008:

Directing EPF to fund RM5 billion ValueCap investment to shore up Bursa Malaysia is an abuse of Government's authority and puts to risk hard-earned savings of millions of its contributors.

The Finance Minister, Datuk Seri Najib Tun Razak announced yesterday that the Government will inject RM5 billion into ValueCap Sdn Bhd to invest in “undervalued companies”, presumed to be those listed on Bursa Malaysia. This was part of the initial slew of high-level measures announced by the Finance Minister, who at the same time confirmed that there will be no cut in the budgeted expenditure for 2009, currently debated in Parliament.

According to press reporters today, he has further announced this morning that the source of the RM5 billion additional investment will not be from the Government's budget but instead be sourced from statutory bodies such as the Employee Provident Fund (EPF).

Hence, this RM5 billion off-budget measure raises several very worrying questions and concerns:

1. What measures have been put in place to ensure that the RM5
billion will be utilised in a fair and transparent manner and not be
used instead to bail out Government-linked or crony companies whose
stock prices have plummeted during the current financial crisis? Will
ValueCap for example, be investing a substantial amount into Malayan
Banking Berhad who has been hit badly, to a large extent due to its
purchase of Bank International Indonesia at exhorbitant prices?

2. Secondly and more critically, how will supporting the prices of
stocks listed on Bursa Malaysia actually change the fundamentals,
including but not limited to the efficiency and productivity, of our
economy and its companies?

3. Most importantly, while agencies such as the EPF are under the
purview of the Finance Minister, he has no basis to direct the EPF to
make particular investment decisions. EPF investments is led by an
investment panel, headed by Y.Bhg. Tan Sri Samsudin b. Osman and they
should be given the leeway to decide what they regard as the best
investment approach to protect and grow the hard-earned savings of
ordinary Malaysians.

As a trustee of members' savings, the EPF must discharge our responsibility with sincerity, honesty and trustworthiness at all times. The investment panel's key objective should be looking at making investments at best prices to maximise returns, instead of investing for the purposes of supporting the stock market which will inevitably put at risk the EPF contributors' interest.

Since our financial institutions have been declared to be sound and financially stable, and hence not susceptible to the current global financial crisis, the Government should let the market dictate its stock prices, while the Government focuses its spending areas which will generate high economic multipliers for the economy.

* Tony Pua Kiam Wee, DAP National Publicity Secretary & MP for Petaling
Jaya Utara

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