SJPP – EPF To Foot Loan Defaults

ARCHIVES 2009

By admin-s On Jul 29, 2009

By Simon Templar

Last Friday, I wrote an article titled 'SJPP; Another PKFZ In The Making' in which I belief that the taxpayers may have to eventually foot the bills of loan defaulters for loans guaranteed by SJPP. That may end up being a massive RM10 billion.

And today, Malaysian Insider posted on their site the following from Reuters:

EPF To Loan RM5bn to Prokhas

KUALA LUMPUR, July 28 — A government agency which is administrating two schemes under the first economic stimulus package is in talks with the employees’ pension fund for a RM5 billion, a business daily said.

The Malaysian Reserve, citing an unidentifed source today, said the Employees’ Provident Fund (EPF) was ready to fund the loan at an undisclosed rate to Prokhas, the government-owned special purpose vehicle.

The source added that Prokhas was also looking at other financing options including government bonds, private debt securities or a term loan that may give more competitive rates.

Malaysia announced its first stimulus package of RM60 billion in March to shore up the export-reliant economy against the global economic crisis.

Prokhas manages two schemes under the package and was allocated 5 billion ringgit each, known as Working Capital Guarantee Scheme and the Industry Restructuring Loan Scheme, which is under the Ministry of Finance.

EPF’s talks with Prokhas may draw some criticism, as loans to government agencies and corporations have in the past been called bailouts for poorly performing local companies by critics and the resurgent opposition.

In 2008, the government said it would transfer RM5 billion from the EPF to state owned fundmanager Valuecap to be invested in undervalued Malaysian stocks. — Reuters

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Note:

Extracted from The Star (24 July 2009)

"… SJPP is managed by Prokhas Sdn Bhd and both are wholly-owned units of the Minister of Finance Inc."

At one read, this looks like a usual business deal for EPF. But let's digest this news a little.

First, EPF is being used as the source of fund again. Whenever the government needs money to bail out anyone, it is always EPF who forks out the money. I am not sure if preferential interest rate is charged – I hope not. But again, the government is using our money as though it is theirs. This BN government has never stop squanderring our tax money and EPF savings, and there is no end in sight.