EPF gave RM25b loan to debt-laden Pembinaan PFI, Finance Ministry says
(Malay Mail Online) – A bulk of debt-ridden Pembinaan PFI’s funds came from a RM25 billion loan from the Employees Provident Fund (EPF), a parliamentary reply from the Finance Ministry has revealed.
According to the reply, however, the loan to the government-owned construction firm, which has reportedly racked up liabilities worth RM27.9 billion in liabilities as at end 2012, is guaranteed by government-backed land leases.
In a written reply to Shah Alam MP Khalid Samad, Finance Minister Datuk Seri Najib Razak revealed that EPF’s portfolio exposure on government-linked companies up to March 31 totals RM79.99 billion and are in the form of fixed-rate loans and bonds/sukuk subscriptions backed by government and bank guarantees, and asset mortgage.
“EPF’s investments in 1 Malaysia Development Berhad is limited to RM200 million, which is guaranteed by the Malaysian government.
“Meanwhile, EPF’s exposure to Pembinaan PFI Sdn Bhd totals RM25.29 billion, which is guaranteed by a leaseback from the government.
“EPF does not provide any funding to Felda Global Ventures Berhad at this point,” Najib said in the written reply to Khalid who had sought a list of EPF’s investments in GLCs.
In March, Parliament’s Public Accounts Committee (PAC) said it was satisfied with the explanation by Finance Ministry officials on how the federal government had issued bonds in the form of federal land leases through Pembinaan PFI to repay RM30 billion in loans from the country’s two largest pension funds — EPF and the civil servants’ pension fund Kumpulan Wang Persaraan (KWAP).
According to PAC chief Datuk Nur Jazlan Mohamed then, Treasury secretary-general Tan Sri Mohd Irwan Serigar Abdullah had explained to the PAC that Pembinaan PFI has so far utilised RM28 billion as at 2013 for public infrastructure projects, which were “generally issued through open tender”.
The funds were sourced from two tranches of loans from EPF and KWAP, with the first payout of RM20 billion issued in 2006 and the second tranche of RM10 billion issued in 2012.
The loans will be repaid through bonds issued on a 15-year tenure up to 2027 for the first tranche and a 10-year tenure up to 2023 for the second tranche.
DAP’s Serdang MP Dr Ong Kian Ming had previously urged the PAC to grill the Finance Ministry on RM27.9 billion in liabilities racked up as at end 2012, raising questions as to its procurement methods and its ability to repay its debts.
He also questioned why the federal government was channeling funds for development projects through Pembinaan PFI instead of using allocations from the country’s annual budget, among other things.
