Why should BN be allowed to treat our EPF money as their personal kitty?

Since former prime minister Mahathir Mohamad took over in 1981, Malaysia's policy-makers have always adopted an over-simplistic financial and economic strategy, which is to simply spend from what was inherited from the past.

The UMNO-BN government just siphoned money from the funds, borrowing huge amounts for economic sustenance rather than for growth. This created a false sense of economic activity and 'busyness' resulting in a transient peak in the real economic growth (adjusted for inflation) with a jump to 6.3 percent in 2007.

In 2008, growth fell to 4.6 percent in 2008, then dived to -1.7 percent in 2009 before rebounding to a fresh peak of 7.2 percent in 2010, only to fall again before hovering around 5 percent now. Sad to say, most of the money was 'invested' in bailing out failed business, and creating businesses without any revenue.

Another characteristic of Malaysian economic growth are the stock market peaks prior to election years followed by a dive after the election over, with the economy doing nothing much in between.

The UMNO-BN government has not really been serious about the financial and economic welfare of the country. Their economic plans just work for winning elections. They in fact “legally steal” the money from the funds or borrow (but may not pay back). Projects are created to siphon the money away, funds are used for election purposes and in between bailouts for cronies are granted, requiring additional funds when their ill-managed businesses turn sour - further burdening the system. This vicious cycle has been going on for a very long time.

History lessons; stealing from the funds and pension reforms

Malaysia has not learned from history and from the events in other countries. The Greek financial crisis is the latest economic blunder that can happen to Malaysia. Apart from Greece, other unscrupulous and rogue governments include Ireland, Mexico and Russia. Like Malaysians, their citizens stand to suffer. The next country could be Italy but Malaysia is surely one disaster in the making, as Minister in the PM's Department Idris Jala has admitted.

Malaysia's Employment Provident Fund has always been used as a source of capital for businesses and investments all over the world by the BN government. In fact the EPF has always been active in investing contributors’ money in many financial activities over a wide spectrum, partly to play safe and in the end, to divide the gains amongst the contributors. As prudent practice, the EPF should never put all its investments in one basket.

Now with the recent revelations by Husam Musa of PAS that besides the loan EPF’s of RM79.4 billion to the Federal government, as revealed by deputy finance minister Awang Adek Hussin, there are other security and federal government bonds purchased by EPF. Husam further said that “As far as I know, if the security and bonds are totalled, EPF’s loan to the government debt will be a whopping RM240billion!”

And this is not all. The figure is not inclusive of the EPF’s loan to government-linked companies. What the total figure actually is, is anyone’s guess!

Anyway, based on RM240billion, Husam concluded that 52.6 percent of the Federal government’s debt amounting RM456 billion in 2011 was actually from EPF. The government has also not been able to reduce the national debt as the amount for 2010 is RM407 billion.

Besides servicing the EPF loans, which surely should not be granted interest free, the government also has to pay pension for retired civil servants or at least gratuity upon retirement. Where would the money come from when the government has not created any specific savings for this or invested or created some sort of mechanism in which to disburse the money to the pensioners? Can it even service the EPF interest, let alone repay the loans.

In the yearly budget, the government has to state the amount of pension money and gratuity, and obviously this will have to be borrowed from somewhere. And the easiest would be from the EPF. So, there goes our retirement fund.

French pension riot as an example and what about the food crisis?

In October 2010 almost half a million people took to the streets of France to protest against pension reforms. That what officials say but the organizer reported a figure of 3.5 million.

The pension reform was to increase the retirement age of pensioners from 60 to 65 years because the French government said, "We can't pay the pensions and we can't avoid increasing the age of retirement. Every country in Europe is raising the age of retirement." The French government then extended the age limit to 62 years.

This is the same thing that the UMNO-BN government has done, to increase the retirement age both in the public and private sectors. This is a clear act of desperation which the UMNO-BN government refused to learn from events around the world. Maybe an accumulative sum of RM256.7 billion of our EPF money has already 'gone' and can never be recouped!

Fortunately for the UMNO-BN, Malaysians have not gone on riot yet because they lack awareness on the matter, unlike the French people. Anyway UMNO-BN has already prepared for that with the recently passed Assembly Bill.

While UMNO is preoccupied with the coming GE-13 and its Annual General Assembly trying to defend and justify their wrong doings, bashing the opposition rather than debating on the economy and the future of our country and with no apparent effort to revamp the dwindling economy - which includes increasing budget deficits, unpaid government loans to the EPF, losses in GLCs - it sure looks like Malaysia is heading towards an unavoidable economic and financial crisis .

This will morph into an eventual national disaster. Finally, Malaysia has also to beware of the Food Crisis of 2007 and 2008, where riots broke out in 22 third-world and developing countries. Are Malaysian leaders prepared for the next 'hunger crisis', coming hot on the heels of the economic and financial crunch to deliver a triple whammy that will cause suffering amongst the people on a scale never seen before?