Malaysia

Putrajaya abusing EPF to fund home loans, says Pua

By Debra Chong
February 01, 2012

KUALA LUMPUR, Feb 1 — A plan to pipe RM1.5 billion from the Employees Provident Fund (EPF) into a scheme offering home loans for those who cannot qualify for bank assistance has sparked outrage from a DAP MP.

Tony Pua called the Barisan Nasional (BN) government’s move an abuse of public funds for political reasons.

Pua said he supported the government’s move but questioned its motive in resorting to money from the EPF. — file picPua said he supported the government’s move but questioned its motive in resorting to money from the EPF. — file picThe opposition Pakatan Rakyat (PR) lawmaker was responding to news reports that quoted Federal Territories and Urban Well-being Minister Datuk Raja Nong Chik Raja Zainal Abidin as saying the funds will be used to help some 20,000 people who are still renting in the city to buy homes under the Federal Territories Foundation.

Pua said he supported the government’s move but questioned its motive in resorting to money from the EPF, which is to safeguard the retirement funds of its 11 million members.

“The EPF is not a lender of the last resort for the poor and neither is it a social welfare organisation,” he said.

“By setting a precedent for it to be used as ‘social welfare’, the EPF could in future be further abused to finance political programmes to win votes under the guise of the same,” he added.

He pointed out that channelling RM1.5 billion of workers’ hard-earned cash to house-buyers whom the government has said were unable to secure loans from banks “will only jeopardise their retirement funds and is clearly an abuse by the government.”

“If the housing unit is indeed a credit-worthy collateral, why can’t commercial banks take it as a collateral? Why are EPF funds being mobilised for housing loans?” Pua pressed further.

The Petaling Jaya Utara MP noted that the minister had tried to play down public fear that buyers may default on their loan.

The current situation appears to mirror the subprime crisis that hit the US a few years ago, triggering the country’s current economic woes.

Pua said the government should use existing financial institutions to funnel soft loans to those who need them instead of turning to the EPF. He listed as examples Bank Rakyat and the Malaysia Building Society Bhd (MBSB).

He urged the government to look for its own funds and for the EPF’s board and investment panel to examine the scheme and ensure workers’ interests are put first.