Take your money out of EPF!!!NOW!

You must have heard about PFI (Private Finance Initiatives) by now but do you know exactly what it means to Malaysians? Can AAB and his gang use our EPF money and then call it “private finance initiatives”?

PFI is a UK concept. In Bolehland, our government leaders are very good at adopting foreign concepts with a “twist”. The National Service is a good example. Unlike Taiwan and Singapore, the Malaysian version is full of of problems and scandals and serves very little purpose as far as providing training for our children. But the money is good for those in power. That’s a “good enough” reason to continue with the scheme(or scam). The bulk of RM600 million spent annually have gone to powerful people and suppliers and contractors linked to Umno. Ask Tan Sri Lee Lam Thye and see if he is willing to share more information with you. 

Anil Netto of ALIRAN has a story on this subject and I urge all bloggers to read his article carefully. You may want to go to http://en.wikipedia.org/wiki/Private_Finance_Initiative for better understanding of the issue.

It appears to us that if we continue to allow the Umno-led BN government to lead this country, the ordinary rakyat continue to be “slaughtered” by these  politicians.


Malaysia‘s newfangled privatization fudge
By Anil Netto
PENANG –
Malaysia is poised to experiment with the next phase of its
privatization process through the initiation of so-called private
finance initiatives (PFIs). But the Malaysian version of the
internationally recognized investment vehicles will be unique in that
it will be the public rather than the private sector that takes the
risks.
This year, Prime Minister Abdullah Badawi announced some 220 billion
ringgit (US$60 billion) worth of new spending projects, including huge
construction contracts budgeted under the government’s 2006-2010 Ninth
Malaysia Plan. Out of that amount, 20 billion ringgit will for the
first time be financed using PFIs, including projects related to
transport, housing, health care and education.
Most of the successful bidders, however, are widely expected to be
ethnic Malay-owned business consortiums, which are given preferential
treatment under Malaysia’s controversial race-based affirmative action
policies. Former premier Mahathir Mohamad first embarked on
privatization in the 1980s, not long after then British premier
Margaret Thatcher created a global stir with her state enterprise
divestment program.

In the Malaysian context, however, privatization has often been
plagued by complaints of patronage, cronyism, unfair monopolistic
advantages and lack of competitive bidding – particularly during
Mahathir’s tenure. At the same time, the process has often maintained
rather than improved poor services, and lopsided fixed contracts have
sometimes allowed new private owners to pass on excessive rates and
tariffs to the government and general public.

Needless to say, that record has given privatization a bad name with
many Malaysians. Now, Abdullah has embraced PFIs as part of his
government’s bid to reduce its budget deficit and tap a new source of
off-balance sheet financing.

PFIs, often criticized as unregulated back-door privatization, were
first introduced globally in 1992 under the United Kingdom’s Tory-led
government of John Major and have since been continued. Through March
2006, a total of 749 projects worth over US$89 billion had been
assigned under PFIs in the UK, where the government locates a private
sector partner to carry out government-initiated projects,
transferring detailed control – and the risk – to the private partner.

PFIs are usually funded through the sale of corporate bonds or
directly by banks. Although PFI borrowing costs may be higher than
government borrowing costs, the investment vehicle’s advocates argue
that the transfer of risk to the private sector, along with the supposed greater efficiencies from private management skills, in the end outweigh the extra funding costs. Moreover, they say that PFIs create a structure to enhance value for money through superior
private-sector innovation and management skills.

Because many PFI projects are ultimately more expensive than if they
were government-initiated, public-sector budgets could be burdened in
the medium term. Under a typical PFI, the private-sector partner will
be paid for work over the period of the contract and if it fails to
meet certain specifications, it will lose out on payments until
standards are improved. PFI projects in the UK have generally been
delivered within budget and on schedule.

Attractive proposition
From Kuala Lumpur’s perspective, this all makes PFIs an exceptionally
attractive investment proposition. Government-initiated construction
projects in Malaysia have long been plagued by delays, cost-overruns
and shoddy work, including well-reported recent cases of cracks on a
newly built highway overpass and substandard construction work on a
number of public school computer laboratories.
But there will be a new twist to
Malaysia’s version of PFIs. A special-purpose firm called PFI Sdn Bhd will soon be established by the Finance Ministry and will be tasked with implementing the new
investment vehicles. On the plus side, officials argue that PFI Sdn
will use the benchmarks of a “public-sector comparator” (PSC) –
that is, cost estimates if the government undertook the project.
Moreover, the capital expenditure and the maintenance costs of the
project must be less than the PSC benchmark before a PFI project is
awarded to a private partner.
So who will actually finance the PFIs? Enter the Employers Provident Fund (EPF), the opaquely-managed, state-run pension scheme, to which
both private-sector employees and their employers are required to make
regular contributions from their salaries. The EPF is tipped to
provide the funding for the initial 20 billion ringgit worth of
projects through PFI Sdn Bhd. In short, the financing will come from the EBF’s public coffers – rather than from private financing – channeled via PFI Sdn Bhd to the builders and construction contractors. The EPF, however, is covered from lending exposure as it
will deal directly with the government-owned firm, PFI Sdn Bhd.
PFI Sdn Bhd, in turn, will use the money to provide financing to
successful project bidders, which are expected to be privately-held
ethnic Malay consortiums, which will manage all aspects of the
project. That means Malaysia’s version of PFIs will differ greatly
from those initiated elsewhere in that the construction and investment
risk will remain with the government via PFI Sdn Bhd and not the
private contractors.

“This is not really a true PFI,” says Subramaniam Pillay, a Kuala
Lumpur-based economist and senior lecturer specializing in
international finance. “Under a true PFI, private investors will
provide the financing and take the risks of the project. And if
anything goes wrong with the project, they have to take a ‘haircut'”.
As for the Malaysian version, he asked, “What is so private about
this?”

The government’s PFIs could face serious problems if they are overtly
designed to help contractors who would otherwise likely not get access
to commercial funding, said P Gunasegaram, group executive editor of
the business weekly, The Edge, in a commentary.

“The [ethnic Malay] contracting community is a strong lobby group
within UMNO [United Malays National Organization, the dominant party
in the ruling coalition] but that does not mean the government has to
cater to them by putting together a scheme that will benefit them and
give them access to funds when many of them may not deserve it,” he
said.

4 Responses to “Take your money out of EPF!!!NOW!”

  1. supersagi Says:

    It is scary these days to read news in the paper. Sometime I just wonder will Malaysia survive the 50th year of Independence? Our ministers are getting out of hands. Just wonder if the CAPTAIN incharge know the route? Look like we are stepping backward each day!

  2. sampalee Says:

    We will definately survive if we REALLY want to.How?Simply by getting rid of umno-the mother of all evil

  3. epfmal Says:

    Read the news below and see the type of idiots (passed their UPSR?) who are entrusted with our EPF savings:
    http://www.thestar.com.my/news/story.asp?file=/2007/1/4/nation/16455252&sec=nation&focus=1

  4. sampalee Says:

    Do not blame the poor idiots.It is the umno evil system that produce them.If we cannot see through the hidden dirty work of umno,we are no different from these idiots.Wake up and stop behaving like idiots which is what the evil umno wants and all along laughing themselves silly with the nation’s wealth while we squabbles over SCRIPTS designed by them.

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