Although you have been a proponent of creation it easier for a open to own their homes as great as advocated for programs similar to Projek Perumahan Rakyat 1Malaysia (PR1MA) as great as Skim Rumah Pertamaku, you am additionally heedful of any attempts by a supervision to drop in to EPF monies to stake unsure investments as great as ventures. As a Member of Parliament, you defend a simple principle that EPF monies belong to a contributors as great as that a supervision as great as a establishment that manages a account does so in trust from Malaysian employees.
Having review some-more statements from both supervision as great as antithesis politicians, you would similar to to have a little comments as great as lift a little questions per this scheme. Although primarily you concluded with YB Tony's response, a closer hearing of a contribution has led me to believe that a little of a comments done by him as great as others from Pakatan Rakyat upon this intrigue have been misleading.
Among a ban charges against this intrigue is that it is bootleg (against a EPF Act) as great as exposes EPF to 'subprime' borrowers who cannot validate for loans from blurb banks (due to a absence of solid income and/or personal resources to pledge such loan) as great as thus poise a greater risk of not servicing as great as in conclusion defaulting upon loans.
Let us look during a legal emanate first. YB Tony says that section twenty-six of a EPF Act does not assent EPF to have loans to individuals. Therefore, this intrigue must be bootleg since it provides loans to particular home buyers. For this assign to hold, you need to inspect a structure of this scheme. Is EPF lending but delay to individuals? Or is E! PF lendi ng to a supervision via a supervision agency? Based upon comments from supervision sources, EPF will lend income to ! a gove rnment via a foundation that is to be set up for this purpose. If this is loyal a subject of legality does not arise.
Moving upon to a some-more contentious emanate of 'subprime' lending, you would agree with views that this is a forward as great as unsure investment by EPF if they were lending but delay to people with bad credit ratings. But if EPF is lending to a government, what is a risk to EPF? you am starting to have a little assumptions here since a peculiarity of reply from a supervision leaders upon this emanate has been bad as great as has given room for YB Tony as great as others to conflict a supervision based upon faulty arguments.
I am presumption that a intrigue is financed by EPF as a loan to a government, not to individuals. If this is correct, a loan from EPF is not 'subprime' since it is done to a supervision of Malaysia that has a great credit rating. It is not even a case where a loan is done but delay to particular home purchasers as great as upon trial by a government. Its a direct loan from EPF to a government. So a credit risk that EPF takes upon is that of a Malaysian government, not particular borrowers who cannot secure loans during blurb banks.
The Prime Minister recently commented that EPF contributors' interests would be protected since "the houses can be sole for a most aloft price." you am presumption a PM is referring to a confidence cover that EPF gets from giving this loan to a government. To put it simply, if a supervision is borrowing from EPF, what is a material a supervision is putting up? The PM's statement is usually half useful since it refers to a a little houses as confidence cover for EPF though does not go in to details. My questions to a supervision as great as EPF would be: What supervision resources have been being used to secure a loan? What "houses" have been a PM referring to? you pretence that PM is referring ! to exist ing government-owned properties that have been being used as material for this scheme. The PM additionally said that a "houses can be! sole fo r a most aloft cost (than a loan value)." If so, what is a worth of a material in relation to a loan? Will a supervision additionally be required to secure a loan with a little cash (it would be prudent for EPF to ask for a partial physical item material as great as a partial cash collateral)? Given that this is an EPF loan to a government, you am presumption it will be sufficient cumulative with great collateral. But sum would be great for a comfort of EPF contributors.
Answers to a questions that you have posed would additionally residence open concerns most some-more effectively than a blanket announcement from a applicable minister as great as a one liner from a PM. At a same time, my assumptions based upon a singular report accessible has debunked antithesis claims that this would expose EPF to 'subprime' borrowers.
The alternative criticism of this intrigue is a event cost to EPF. In alternative words, if EPF creates this loan to a supervision for this scheme, would it be means to generate competitive earnings compared to alternative investments EPF makes? We need to remember that EPF invests in many different areas. EPF invests in companies. It additionally creates investments in a capital markets - both shares or equities as great as additionally debt. On a debt side, it can possibly buy holds or lend. That principle relates to a supervision as great - EPF can possibly buy Malaysian Government Securities (MGS) or lend directly.
So from EPF's perspective, they have been treating this as an additional loan to a government. But what have been a expected earnings from this loan? you review somewhere an interest rate of 5.5% for this loan. How does that compare to earnings from MGS? Will this loan generate less earnings than simply shopping Malaysian supervision bonds? Will EPF contributors remove out upon better earnings since of a social ! obligati on that a supervision wants to perform funded by an EPF loan?
My perspective is if EPF can secure great earnings from a supervision for this loan benchmarked against investments in a simil! ar item class, since shouldn't it give a loan?
If my assumptions hold, afterwards a issues raised by YB Tony as great as his colleagues have been red herrings. Its not unequivocally EPF monies you should be concerned about since a loan is done to a supervision as great as thus has a supervision guarantee. That's a most appropriate pledge you can get in town. The real emanate that a antithesis have utterly missed is not EPF monies though income from a supervision - as great as by extension a rakyat.
The risk with this intrigue is not borne by EPF though by a government. Even if a home customer cannot service his loan to a government, a supervision will still have to compensate EPF. So a credit risk is wholly carried by a government. It is a supervision that is creation 'subprime' loans, not EPF. It is a supervision that is exposing itself to unsecured loans, not EPF. As a Member of Parliament as great as custodian of my voters' trust, you want to know what a process for vetting loan applications under this intrigue would be? What risk supervision processes will a supervision hospital prior to giving out these loans? If borrowers have been those that would differently be deserted by blurb banks, what criteria will a supervision use to approve a loan application? These have been distant some-more important questions than a not pertinent ones that antithesis MPs have come up with since in conclusion a exposure will be to a complete rakyat's money, not EPF.
On a final note, you just wanted to indicate out a pomposity of a antithesis upon this issue. Their assign is that EPF is being forced to have unsure loans to account a populist supervision social program. you consider that evidence has been refuted. But speaking of unsure EPF investments, let me remind them of something they promised in their Buj! u Jingga choosing manifesto. One of their promises is if they win, they would take over a complete resources as great as operations of PLUS main road as great as annul tolls. They would do this by instructing supervision bodies that already own partial of PLUS to buy ou! t minori ty shareholders as great as afterwards annul tolls. The supervision bodies that own PLUS have been Khazanah as great as EPF. EPF invested in PLUS since it gives great earnings from income generated by tolls. If a antithesis come in to power as great as have great upon their guarantee to annul tolls, EPF will remove wholly earnings from their investment in PLUS. This is worse than EPF creation 'subprime' loans (which still have a possibility of being paid off) as great as distant worse than EPF creation a cumulative loan to a government. If a antithesis credit a supervision of forward use of EPF monies in this latest housing scheme, it is not as irresponsible as their Buku Jingga guarantee that would basically leave EPF but any earnings from their investment in PLUS!
So, a most appropriate YB Tony as great as his colleagues look during their own irresponsible, unrealistic as great as forward promises that can clean out billions of worker contributions in EPF prior to creation half-baked accusations against a government.
I await a supervision as great as EPF to answer a questions that you have posed. Apart from a antithesis not knowing a right questions to ask as great as in a centre forgetful their some-more forward proposal involving EPF monies, you would additionally similar to to indicate out that a supervision reply to this emanate has additionally been substandard. The supervision cannot make known a intrigue similar to this but necessary sum as great as timely rebuttals. The peculiarity of report coming from a supervision has been bad as great as reply has been slow. If ministers cannot learn policy details, allow professionals to quickly insist issues to a public. Grand announcements as great as one-liner responses to! a antit hesis just won't cut it.
Khairy Jamaluddin
MP for Rembau
Chairman of BN Youth
8 Feb 2012
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