concealed facts from the cabinet.
in charge of several portfolios in BNM at the time, including the management of external reserves.
Cheah(pic) thinks the local stock market could go up by between 5% to 10% this year while the ringgit, which has mostly been on an uptrend in recent times, is “still down quite a lot”, against the US dollar.
KUALA LUMPUR: A renowned global investor has called for structural reforms in Malaysia, saying that the country faces “very real” structural issues.
Penang-born Datuk Seri Cheah Cheng Hye (pic) who left Malaysia decades ago counts the middle-income trap, brain drain and high public service spending as current risks to the country.
Based in Hong Kong as the chairman and co-chief investment officer of fund and asset management group Value Partners Group for over two decades now, Cheah who helps manage over US$16bil in funds, however concedes that Malaysia remains a country with huge potential and opportunities.
“I don’t think we should underestimate the importance and attractiveness of Malaysia but what I am saying is that if we don’t want to be stuck forever (being) a so-called middle-income country, we need structural reforms,” he told StarBiz in a recent interview.
“Or maybe… we do want to be stuck because it is a comfortable position and because then, we can make a lot of compromises.”
“ (If that’s the case), we should be frank and say it, don’t pretend that we want to be an advanced country because that requires certain sacrifices.”
“The reality is that we are getting less and less competitive, we ranked number 23 in the latest Global Competitiveness report ,behind France and Australia which are developed countries. (Number 23) is not good enough for a developing country,” said Cheah, who recently made it to the top 40 richest Malaysians list.
Emphasising the issue of brain drain, Cheah, a former financial journalist and equities analyst said Malaysia could perhaps emulate India in this area where the concept of an Indian national overseas card has been introduced.
“I am told there are more than one million Malaysians overseas – (people like) entrepreneurs, these are exactly the type of people we want to stay here but they are not.
“We could introduce a new type of card called the Malaysian national overseas card for Malaysians who have chosen to leave the country and become citizens elsewhere.”
This card will give these Malaysian-born individuals no voting rights but will allow them to come back to work and invest here like everyone else, he said.
Cheah said this could help re-attract talent and there will be no political price to pay, because these people cannot vote here nor transfer this card to their children who would likely be foreigners.
“Some may actually come back, because it is not always greener on the other side… but you must make it easy enough (for them to come back).”
Cheah also pointed out that the amount Malaysia spends on public service is “very high” by any standards.
“Quoting from memory, about 30% of government spending is on civil service salaries and 16.5% of all employment in this country comprise civil servant jobs.
“No matter how you explain it, this is abnormally high ; something that I have learnt from my stay in Hong Kong is, keep the government as small as possible.”
He said although the civil service segment here appears to be bloated, it would be “unrealistic” to fire civil servants.
“Instead, maybe we can consider freezing and redeploying resources.
“Like any corporation, if you have too high a headcount, you freeze hiring and you redeploy people to where they are needed,” Cheah said.
Separately, Cheah, whose investments are mostly China-centric believes that Myanmar could be the next big thing.
“Nowadays, I like Myanmar because it is still cheap.
“It has about 55 million people but its gross domestic product (GDP) is only about US$65bil, Malaysia’s GDP is probably about US$320bil.
“Myanmar has enormous potential, at last they are emerging , gradually reconnecting with the world, they have (a lot of ) raw materials and are in a good position as one of the significant Belt and Road countries, China will go out of its way to invest there.”
Cheah said he would like to set up a Myanmar fund to invest in the country and is in the process of studying this possibility.
Among markets in Asia, Malaysia to Cheah, is “moderately attractive”.
He said consumer sentiment here was finally improving after it took a beating largely due to the implementation of the Goods and Services Tax (GST) back in 2015 plus there are some “interesting corporate restructuring taking place.”
Also, it is General Election year which going by history, tends to send the market higher, he said.
“I think there are good arguments why the Malaysian market is good this year but the arguments are not strong enough to result in a very strong market – and there’s also a global environment that’s not as good as last year.”
“I think the US administration is now focusing on globalisation and world trade and it seems to be moving in the direction of conflict with China over trade.
“If there is a China-US trade war, Malaysia will suffer collateral damage because we are a medium-sized player in a global supply chain, so it will be very disruptive,” Cheah said.
Upside for the Malaysian market could also be limited this year, he said, because its current valuation is relatively high at over 16 times price to earnings.
Cheah thinks the local stock market could go up by between 5% to 10% this year while the ringgit, which has mostly been on an uptrend in recent times, is “still down quite a lot”, against the US dollar.
The local unit appreciated by 8.6% against the dollar last year after losing some 4.5%, a year earlier.
At last look, it was traded at 3.9395 against the greenback.
By Yvonne Tan The Staronline
Alibaba Cloud, which set up a datacentre in Malaysia last year, is considering a second one to further develop a local ecosystem, its president Simon Hu said. — Reuters
Jack Ma’s Life Advice Will Change Your Life (MUST WATCH)
KUALA LUMPUR: Alibaba Group will set up a traffic control system harnessing artificial intelligence for Malaysia’s capital Kuala Lumpur, its first such service outside China, as the e-commerce giant pushes to grow its cloud computing business.
Alibaba Cloud, the cloud computing arm of Alibaba Group, said on Monday it plans to make live traffic predictions and recommendations to increase traffic efficiency in Kuala Lumpur by crunching data gathered from video footage, traffic bureaus, public transportation systems and mapping apps.
It is partnering with state agency Malaysia Digital Economy Corporation (MDEC) and the Kuala Lumpur city council to roll out the technology, which would be localised and integrated with 500 inner city cameras by May.
The partnership comes after Alibaba founder Jack Ma and Malaysian Prime Minister Najib Razak launched an “e-hub” facility last year, part of an initiative aimed at removing trade barriers for smaller firms and emerging nations.
Alibaba Cloud, which set up a data centre in Malaysia last year, is considering a second one to further develop a local ecosystem, its president Simon Hu said on Jan 29.
He declined to elaborate on the company’s total investments made and planned for in Malaysia, but said it was “no small amount” and that the investments would continue if there was demand for cloud computing technologies.
MDEC’s chief executive officer Yasmin Mahmood said there was no estimate of City Brain’s impact on traffic in Kuala Lumpur yet. The traffic management system in the Chinese city of Hangzhou had resulted in reports of traffic violations with up to 92% accuracy, emergency vehicles reaching their destinations in half the time and overall increase in traffic speed by 15%.
Najib has forged close ties with China in recent years. Last year, the Malaysian leader announced a slew of infrastructure projects, many funded by China, as he worked up momentum towards a general election he must call by the middle of this year. — Reuters
Expert panel: (From right) Yeo, Dr Gue and Prof Ramli arriving for the inquiry.
GEORGE TOWN: A temporary structure supporting a worksite slope in Tanjung Bungah developed cracks in mid-June, a Commissioner of Inquiry heard.
Soil Mechanic Sdn Bhd director Cheah Wing How, who was a sub-contractor of the project where a landslide killed 11 workers, said he was informed by a clerk to carry out remedial works as the granite wall had cracked.
Cheah said his team left after completing the granite works and soil-nailing works to enhance the stability of the temporary slope.
There was, however, no mention when they completed the works.
“When we returned, we found there were pile cap excavation works carried out near the slope.
“We believe there was soil movement that resulted in the cracks on the granite wall.
“We were carrying out remedial works and 11 days into the job, the landslide happened,” said Cheah, who has 20 years’ experience in the field.
Cheah was testifying on the first day of the public hearing into the landslide tragedy by the State Commission of Inquiry (SCI) at City Hall in Esplanade yesterday.
On Oct 21, last year, a landslide hit the affordable condominium project made up of two 49-storey towers with 980 units in total within the Permai Village township near the Tunku Abdul Rahman University College.
Among the 11 killed was site supervisor Yuan Kuok Wern, 27.
During the proceeding, the Penang Island City Council (MBPP) also presented eight drone videos that showed the slope and the surrounding area after the tragic incident.
SCI chairman Datuk Yeo Yong Poh said they planned to carry out a site visit tomorrow.
He also fixed the hearing to continue until Monday, followed by Feb 8 to Feb 11, March 24 to March 28 and April 18 to 25.
Other members of the commission are geotechnical expert Datuk Dr Gue See Sew and forensic geo-technical engineer from Universiti Teknologi Malaysia Prof Ramli Nazir.
The SCI was gazetted on Dec 21 last year to investigate the landslide after Yang di-Pertua Negri Tun Rahman Abbas gave his consent on Dec 6, 2017, for the appointment of the members of the commission and its terms of reference.
Meanwhile, Penang Citizens Awareness Chant Group (Chant) adviser Yan Lee said the entrance to the Teik Granite Quarry, which is located near the site where the landslide occurred, should be fenced up.
“Anyone can just walk into the site as the safety measure is not up to mark.
“We have voiced our concern to the Penang Island City Council, the Department of Environment as well as the Land and Mines Department,” he said yesterday.
By Chong Kah Yuan and Jo-Leen Wong The Star
Behind BJ Cove houses at Lintang Bukit Jambul 1 is an IJM Trehaus Project. Approximate Coordinates : 5°20’38.47″N,100°16′..
STRATA-type property is and has been all the rage. It is also expected to be “the living model” if not already.
Whether in cosmopolitan cities or suburban fringes, and as space becomes “in want” and prices hike, we feature our final article on strata-related property highlighting pertinent questions frequently asked to which Chris Tan (CT) gives input on.
Q: What should one look out for in the S&P before deciding on buying a particular strata-titled residential property?
CT: Buying a strata title property is not just buying a property but buying into a community living regulated by law. As a buyer, you are not only responsible for your very own unit but also the common property within the development too.
There is an ongoing obligation to pay the monthly service charges and sinking fund until the day you sell the same to another owner.
Besides the S&P Agreement, you are normally expected to sign the Deed of Mutual Covenants too, that regulates the relationship of the many owners within the same development with house rules vis-a-vis the prescribed by-laws under the Strata Management Act. In addition to the compliance with these rules, you are also expected to participate in the management of the common property at the Annual General Meeting as well as the Extraordinary General Meeting.
In the completion of the S&P Agreement, do ensure that the seller has no more outstanding charges and sinking funds owing the management and that the deposits paid are to be adjusted accordingly.
Q: Can you please explain further on ‘share units’ of strata-titled property? How does this affect a residential strata-titled property owner or what is the relation between the owner and the share units?
CT: Share unit has always been there in strata living as it will be stated in the strata title upon its issuance. It is now capturing the limelight, given that it is now the basis to be contributed into the maintenance charges and not the usual rate psf of the size of your main parcel.
There are different ‘weightages’ for the main parcel, the accessory parcel and the type of usage to make up the various elements of the share unit.
Suffice to say that two units of apartments of the exact same size might have different share unit allocation, if one has more accessory parcels than the other, or one is of commercial usage while the other is residential.
Q: What are some current and common issues faced by owners of strata-titled residential property and how would these be best settled?
CT: Issue 1: Contribution to service charges and sinking funds from the owners have always been done on the total size (in sf.) of the main parcel. Under the new regime since June 2015, it should now be based on per share unit instead.
Share unit is a concept that takes into account the size and the usage (of different allocated weight) of both the main parcel as well as the accessory parcel. It’s stated clearly in the strata title when it is issued. It is also the basis of voting by poll if so requested in any General Meeting. Share unit is therefore now the basis of both contribution and control as opposed to just control in the past.
In theory, it should be a fair method for all. The issues are:
(i) Some strata owners find themselves paying more than before while some strata owners now pay less; and
(ii) The Share unit allocation under the previous legal regime was a result of consultation and discretion and not as transparently guided under the new law. It is a difficult process and to adjust again, particularly when the strata titles have been issued, will be tedious.
Issue No. 2: In Phased Development there is now a requirement to file the Schedule of Parcels (SOP) stating clearly the total share units to be offered under the entire development before one can proceed to sell. It therefore includes the later phases of a development that will only be developed in the future.
The issue is that this SOP can only be adjusted if we can get 100% of the owners to agree or it is a direction from the authority.
There will be no flexibility accorded to the developer who might want to change the SOP for the feasibility or sustainability of the development, taking into account the new circumstances of the future, in the best interest of the entire development.
Another related issue would be on the contribution of the allocated share units by the developer for yet to be developed phase in the maintenance of the common property already built and delivered.
Q: Any other ‘surprises’ or areas of concern that many strata-titled residential property owners are unaware of until after purchase of such residents?
CT: Don’t be surprised if the property does not come with an allotted car park, although it is a norm to expect a car park to come with the unit. It is not always the case.
Q: Like many busy owners of a strata-titled property who do not have the time to sit in at resident’s meetings with the management body – many have simply ‘gone with the flow’ of things as ‘questions/disputes’ require time for discussion.
What would you recommend for busy individuals who have ‘no time’ to attend such meetings but can only look at the annual/bi-annual strata/building management statements/financial reports? What should one keep an eye out for in these financial statements?
Why is it important to attend these meetings; what would owners be losing out on by not attending and being an ‘active owner’?
CT: It is a regulated community living and participation is expected of every owner.
Although many have chosen to be passive, you need to participate or run the risk of letting major decisions lay in the hands of the active few.
You should keep an eye to ensure that the charges collected are well spent, that collection should always be monitored and the performance of the appointed property manager.
Also, understand your rights and obligations as a strata owner is important, and ensure that you and your neighbors are equally aware of the same too.
Q: As a tenant, and not the owner of the ‘parcel’ – are they bound to all the By-laws?
CT: The by-laws, additional by-laws and amendment of such additional by-laws made by the Management Body shall not only bind the owners but also the tenants, chargess, lessees and occupiers.
Q: Any other important issues that you would like to highlight to readers of theSun?
CT: Moving forward, strata living will be the preferred way of community living. Take a keen interest to learn and understand this living model in order to get the most out of it.
There are many more frequently asked questions, especially on management bodies, by-laws and leakage and defects. Answers to these can be found in Chris Tan’s Owner’s Manual & Guidebook.
Follow our property column next Friday for more insights on the market in the local scene.
One way to solve housing shortage problem is to build more houses.
“If we take a look at countries with commendable housing policies such
as Singapore and Hong Kong, we notice that the government plays a very
important role in building and ensuring a sufficient supply of housing
for their people.”
THE issue of affordable housing has been a hot potato for many countries, especially for a nation with a growing population and urbanisation like ours.
In my previous article, I mentioned that there was a growing shortage of affordable housing in our country according to Bank Negara governor Tan Sri Muhammad Ibrahim. The shortage is expected to reach one million units by 2020.
According to Bank of England governor Mark Carney, one of the most effective ways to address the issue is to build more houses. There are good examples in countries like United Kingdom, Australia and Singapore, which have 2.4, 2.6 and 3.35 persons per household respectively.
In comparison, the average persons per household in our country is 4.06 person, a ratio which Australia had already achieved in 1933! To improve the current ratio, we need to put more effort into building houses to bring prices down.
If we take a look at countries with commendable housing policies such as Singapore and Hong Kong, we notice that the government plays a very important role in building and ensuring a sufficient supply of housing for their people.
For example in Singapore, their Housing and Development Board (HDB) has built over one million flats and houses since 1960, to house 90% of Singaporeans in their properties. In Hong Kong, the government provides affordable housing for lower-income residents, with nearly half of the population residing in some form of public housing nowadays. The rents and prices of public housing are subsidised by the government and are significantly lower than for private housing.
To be on par with Australia (2.6 persons per household), our country needs a total of 8.6 million homes to house our urban population of 22.4 million people. In other words, we need an additional 3.3 million houses on top of our existing 5.3 million residential houses.
However, with our current total national housing production of about 80,000 units a year, it will take us more than 40 years to build 3.3 million houses! With household formation growing at a faster rate than housing production, we will still be faced with a housing shortage 40 years from now.
Therefore, even if the private sector dedicated all its current output to build affordable housing, it will still be a long journey ahead to produce sufficient houses for the nation. It is of course impossible for the private sector to do so as it will be running at a loss due to rising costs of land and construction.
In view of the above, the government has to shoulder the responsibility of building more houses for the rakyat due to the availability of resources owned by the government. Land, for example, is the most crucial element in housing development. As a lot of land resources are owned by government, they must offer these lands to relevant agencies or authorities to develop affordable housing.
I recall when I was one of the founding directors of the Selangor State Development Corp in 1970s, its main objectives was to build public housing for the rakyat.
However, today the corporation has also ventured into high end developments in order to subsidise its affordable housing initiatives. This will somehow distract them from focusing on the affordable housing sector.
Although government has rolled out various initiatives in encouraging affordable houses, it is also important for the authorities to constantly review the original objectives of the relevant housing agencies, such as the various State Economic Development Corporations, Syarikat Perumahan Negara Bhd, and 1 Malaysia People’s Housing Scheme, to ensure they have ample resources especially land and funding to continue their mission in building affordable housing.
A successful housing policy and easy access to affordable housing have a huge impact on the rakyat. It is hoped that our government escalates its effort in building affordable housing, which will enhance the happiness and well-being of the people, and the advancement of our nation.
Datuk Alan Tong has over 50 years of experience in property development. He is also the group chairman of Bukit Kiara Properties. For feedback, please email firstname.lastname@example.org.
By Alan Tong
Important report: RCI Secretary Datuk Dr Yusof
Ismail speaking to media after submitting a police report over Bank
Negara forex trade losses in Putrajaya.
THE Royal Commission of Inquiry into the foreign exchange losses suffered by Bank Negara Malaysia (BNM) back in 1990s has recommended that three people be probed over their involvement and liability.
They are former prime minister Tun Dr Mahathir Mohamad, his then finance minister Datuk Seri Anwar Ibrahim and ex-Bank Negara advisor Tan Sri Nor Mohamed Yakcop, whom the report also named as “principally liable for criminal breach of trust”.
The 524-page report also called out Tun Daim Zainuddin, who served as finance minister from July 14, 1984 to March 15, 1991, for having aided and abetted Nor Mohamed by leaving BNM “to its own devices”.
The commission found that the Cabinet in the 1990s was not given the full picture by Anwar on the forex losses, adding that he had “deliberately concealed facts and information and made misleading statements”.
“The Commission is of the opinion that there was deliberate concealment as BNM’s annual reports did not state the actual losses incurred from the forex dealings from 1992 to 1994.
“It is also of the opinion that the then prime minister (Dr Mahathir) had condoned the actions of the finance minister,” it said.
The RM31.5bil losses, it said, were hidden using “unconventional accounting treatments”, such as booking losses to reserves in the balance sheet and the absorption of the remaining losses by the transfer of shares from the Government to BNM as well as the creation of a “Deferred Expenditure” to be repaid in instalments over a decade.
“All the actions to conceal the losses were discussed and approved by the board of directors before the accounts were signed off by the Auditor-General.
“No further action was taken by the Finance Minister and Treasury secretary-general (as a board member) despite being informed by the Auditor-General on the losses and the unusual accounting treatments,” said the report.
Anwar, noted the Commission, had been informed about the actual forex losses suffered by BNM.
Dr Mahathir, it said, was informed by Anwar together with then Treasury deputy secretary-general Tan Sri Clifford Francis Herbert in late 1993 that BNM had suffered estimated losses of RM30bil on the forex dealings for 1992 and 1993.
However, in the extract of minutes from three Cabinet meetings on March 30, April 6 and 13 in 1994, Anwar had made “no mention of the actual losses of RM12.3bil for 1992 and RM15.3bil for 1993.”
Anwar had chaired the March 30 meeting as the deputy prime minister. The losses for 1993 were reported as RM5.7bil.
“The prime minister, who chaired the meeting on April 6, did not correct or offer more information when the forex losses for 1993 were recorded as only RM5.7bil,” it pointed out.
“The Commission is of the view that it is the finance minister’s responsibility to inform the Cabinet the significant financial affairs about BNM as the Cabinet has collective responsibility with the finance minister and the prime minister for the country’s affairs.”
Dr Mahathir, it said, claimed to have no knowledge of the real amount of losses, which was untenable with his meticulous nature, as well as that under the law, BNM was the banker and financial agent to the Government with the remainder of its net profit to be paid into the Federal Consolidated Fund.
The report said as pointed out by Herbert, he had expected Dr Mahathir to be outraged but his reaction was quite normal with him uttering “sometimes we make profit, sometimes we make losses”.
“His reaction to and acceptance of the huge forex losses suggest that he could have been aware of the forex dealings and its magnitude,” said the report.
The RCI also found Dr Mahathir’s claim that he could only remember the amount of RM5bil forex losses when informed about it in a meeting with Anwar and Herbert in late 1993 to be “questionable”.
It said this was because based on testimonies of other witnesses and documentary evidence, the RM5.7bil only surfaced when Bank Negara’s 1993 annual report was presented to the Cabinet on March 30, 1994.
“Despite his denials, the Commission is of the opinion that a thorough investigation should be carried out to determine the extent of his involvement and liability,” said the report.
By Martin Carvalho, Hemananthani Sivanandam, Loshana K. Shagar, and Rahmah Ghazali The Star
|Inspector-General of Police Tan Sri Mohamad Fuzi Harun says police will
open investigation paper following a report that was lodged by Royal
Commission of Inquiry (RCI) secretary Datuk Dr Yusof Ismail. (Image is
for illustration purpose only).
KUALA LUMPUR: Police have set up a taskforce to investigate possible criminal breach of trust and cheating which may have been committed during Bank Negara Malaysia’s foreign exchange losses in 1990s
Inspector-General of Police Tan Sri Mohamad Fuzi Harun said police would open investigation paper as the forex Royal Commission of Inquiry (RCI) had lodged a police report this afternoon.
“A taskforce has been formed and it will lead the investigation. We are investigating the case under Section 409 of the Penal Code for criminal breach of trust,” he told the New Straits Times when contacted.
RCI’s secretary Datuk Dr Yusof Ismail, who is the Finance Ministry Strategic Investment Division director, had lodged a report at Putrajaya police headquarters at 4.10pm asking police to start an official investigation.
In the police report, it was stated that those who were involved in the alleged wrongdoings were Bank Negara Malaysia (BNM) officers, BNM Board of Members, National Audit Department, Finance Ministry and the prime minister who served during the period.
|Royal Commission of Inquiry (RCI) secretary Datuk Dr Yusof Ismail seen
leaving the Putrajaya police headquarters after lodging a report. Pic by
AHMAD IRHAM MOHD NOOR
The RCI, in its 528-page report that was tabled in Parliament today, said it believed that Datuk Seri Anwar Ibrahim, who was Finance Minister at the time, had misled the government and concealed the actual losses suffered by BNM.
RCI also said it believed that the prime minister at the time, Tun Dr Mahathir Mohamad, had approved Anwar’s “misleading statements”.
The commission also revealed that the losses were far larger than that what was initially reported by the central bank, RM31.5 billion as against RM5.7 billion, in the period of three years.
Yusof spent almost 40 minutes at the police headquarters and later spoke to reporters who were waiting outside.
He said in the report, the commission had requested the police to start a official investigation on the possible criminal breach of trust, forgery and other wrongdoings which may have been committed during the forex activities.
“Our report is basically requesting the police to start investigation and for the Attorney-General Chambers to take action based on the findings by the police,” he said.
Putrajaya OCPD Asst Comm Rosly Hassan who confirmed that the report was made, said a special unit in Bukit Aman would investigate the case.
By TEOH PEI YING and HASHINI KAVISHTRI KANNAN New Straits Times
The Employees Provident Fund (EPF) reports an increase in quarterly investment income to RM12.95 billion for the third quarter ended Sept 30, 2017 (Q3 2017), despite recorded net impairment of RM791.55mil in the third quarter, more than double the impairment made a year earlier. The EPF posted a 74% surge in investment income to RM11.8bil in the first quarter and a 36.6% growth to RM11.51bil in the second quarter.
KUALA LUMPUR: The Employees Provident Fund (EPF) today reported an increase in quarterly investment income to RM12.95 billion for the third quarter ended Sept 30, 2017 (Q3 2017), up 5.13 per cent, from RM12.32 billion recorded during the same period last year.
“The EPF’s overall portfolio performance has benefited from the rally in overseas equities markets in the third quarter of 2017,” Investment Performance, Deputy Chief Executive Officer (Investment) Datuk Mohamad Nasir Ab Latif said today.
He said the pension fund did not see similar returns from the domestic equities market as the FBM KLCI performance was flat compared with other markets, which recorded between two and five per cent growth.
The EPF recorded a net impairment of RM791.55 million, in the quarter under review, in accordance with the Malaysian Financial Reporting Standards (MFRS 139), and this was higher compared with RM349.59 million recorded in the same quarter last year, he said in a statement today.
This is due to the higher provision recorded for domestic equities in the telecommunications and oil and gas sectors.
In the third quarter of 2017, equities, which made up 41.86 per cent of EPF’s total investment assets, contributed RM7.91 billion of income or 61.09 per cent of the total investment income.
The income recorded was 12.75 per cent higher than RM7.02 billion recorded in the corresponding quarter in 2016, he said.
As at September 2017, a total of 50.45 per cent of EPF’s investment assets were in fixed income instruments which recorded an income of RM4.49 billion, equivalent to 34.63 per cent of the total quarterly investment income, said Mohamad Nasir.
Out of the RM4.49 billion, Malaysian Government Securities & Equivalent recorded RM2.17 billion in the third quarter of 2017, an increase of 10.96 per cent or RM213.98 million, from RM1.95 billion recorded in the same quarter in 2016, in line with the growth of the portfolio.
Loans and bonds, however, generated lower investment income of RM2.32 billion compared with RM2.56 billion in the same quarter last year, he said.
Investments in Money Market Instruments and Real Estate and Infrastructure each represented 3.53 per cent and 4.16 per cent of total investment assets, and contributed an investment income of RM274.27 million and RM263.83 million, respectively, in the third quarter of 2017.
“Our current investment in money market instruments is above the targeted three per cent under the Strategic Asset Allocation due to the ongoing regulatory restrictions in new overseas investments.
Over the long-run, the EPF must continue to expand our foreign assets portfolio as it is key to our diversification and allows us to meet our return targets,” said Mohamad Nasir.
As at Sept 30, 2017, the EPF’s overseas investments, which accounted for 30 per cent of its total investment asset, contributed 48 per cent to the total investment income during the quarter.
Diversification into different asset classes in various countries and currencies had helped the EPF to record higher income for the quarter, despite a significant difference in market performance, globally.
Out of the total RM12.95 billion investment income for the third quarter of 2017, a total of RM860.83 million was allocated for Simpanan Shariah, which derived its income solely from its portion in Shariah assets, while RM12.09 billion income was allocated for Simpanan Konvensional, which is generated by its share of both Shariah and non-Shariah assets, he said.
The value of EPF investment assets reached RM771.20 billion, a 5.48 per cent or RM40.09 billion increase from RM731.11 billion, as at Dec 31, 2016.
Out of the total investment assets, RM370.10 billion or 48 per cent, were in Shariah-compliant investments and the balance in non-Shariah assets.
“We still have one more quarter before the year-end and we are confident that our diversification into various asset classes will enable us to meet our real dividend target of at least two per cent above inflation over a three-year rolling period, for both Simpanan Shariah and Simpanan Konvensional,” he added.