Philosophy Politics Economics

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Nong Chik Should Learn "Subprime" Before Debate Posted: 07 Feb 2012 06:38 PM PST The Malay Mail reported yesterday that Federal Territories and Urban Wellbeing Minister Datuk Raja Nong Chik Zainal Abidin has challenged both of us "to a one-to-one public debate" on "use of money from the Employees' Provident Fund (EPF) for a low-cost housing loan scheme." Raja Nong Chik said "these impoverished people cannot get housing without help. Are they saying that these people do not deserve housing?" However, he added that we should debate him "one-to-one in front of all the residents." First and foremost, we have repeatedly stated that Pakatan Rakyat fully support the noble objective of ensuring that affordable housing for low income urban dwellers. However, the fulfilment of this aim - home ownership for the urban poor - is the responsibility of the government of the day, and not the responsibility of Malaysian workers. Hence, we are more than happy to debate with the Minister in the interest of the public to ensure that all relevant issues are thrashed out in an open and transparent fashion.  In order to ensure that the public receives the full story behind the controversy, the debate must be conducted on a level playing field. The debate must not only be open to low-cost housing residents in Kuala Lumpur, it should be open to all Malaysians, especially the stakeholders who are EPF contributors.  Preferably, the debate should be televised to ensure that Malaysians who are not able to make it to the debate like contributors from East Malaysia have the opportunity to listen to both sides of the argument. In addition, in the interest of transparency and accountability, we believe that Raja Nong Chik who is willing to openly debate this issue, will have no problems providing full disclosure of the agreements made between all the government entities and EPF.  Only then all the members of parliament as well as the public can have full information access to debate this issue. Raja Nong Chik had in the Malay Mail report even tried to teach us what is "sub-prime" loan.  He said the MPs were mistaken in comparing the loans to the sub-prime loans which he said referred to inflated loans sold at double the property value. "Do they even know what subprime lending is? These properties are worth double or even triple of what City Hall is asking," he explained. Perhaps in the Minister's attempt to be clever, he is asking for pie in his face.  The Federal Deposit of Insurance Corporation (FDIC), and independent agency of the United States Federal Government clearly refers "sub—prime" as "the credit characteristics of individual borrowers. Subprime borrowers typically have weakened credit histories that include payment delinquencies… They may also display reduced repayment capacity as measured by credit scores, debt-to-income ratios, or other criteria that may encompass borrowers with incomplete credit histories" with no mention of "property value". What we have here today is the EPF lending money to borrowers who Raja Nong Chik himself has admitted will not qualify for loans from commercial banks.  The fact that the low-cost property value, which Raja Nong Chik claims to be worth double or triple the selling price has nothing to do with the issue of "sub-prime". Perhaps the Minister might want to polish up his knowledge of subprime credit and lending before taking on the challenge to debate either one of us, to save himself from further public embarrassment.

EPF Employee Representative Board Members Must Reject Low-Cost Housing Loan Scheme Posted: 07 Feb 2012 08:34 AM PST We welcome the statement by the Malaysian Trade Union Congress (MTUC) Secretary-General, Abdul Halim Mansor who objected to the plan by EPF to extend RM1.5 billion in loans to low-cost housing purchasers in Kuala Lumpur who failed to secure financing from commercial banks as reported in The Malaysian Insider yesterday. It is clear that the loan scheme is in breach of EPF Act 1991 which has no provisions for EPF to extend loans to individuals with the low-cost housing units as a collateral.  The EPF may lend funds to federal and state governments, to corporate bodies or even to its members subject to terms and conditions under Clause 26 which defines the "power of the Board to invest". The attempt by the Federal Government to turn EPF into a lender of last resort for social welfare programmes will also set a bad precedent for the fund being abused politically to win votes in the future.  While the Prime Minister, Datuk Seri Najib Razak has tried to play down the scheme by claiming that the RM1.5 billion loan is only a fraction of EPF fund size, but if approved, the scheme could well be expanded and extended to other states in the country. The EPF on its website says that it "aims to provide financial security for its members' retirement purposes. The fund is committed to preserving and growing the savings of its members in a prudent manner in accordance with best practices in investments and corporate conduct."  Hence the workers' retirement funds must not be exploited and risked in a low-cost housing programme for those with extremely poor credit ratings. Hence we call upon the MTUC to take an official position to strongly object to the abuse of EPF funds in the EPF Board where the former is represented.  Encik Mohd Khalid Atan, the President of MTUC sits on the EPF Board with 3 other members as representatives of employees.  The others are Loke Yim Pheng, Secretary-General of the National Union of Teaching Profession (NUTP), Hadiah Leen, President of Sarawak Bank Employees Union (SBEU) and Azlin Awang Chee, General Secretary of the Sabah Commercial Employees Union (SCEU). The representatives must voice their objections to the low-cost housing loan scheme which will put at risk Malaysian workers' savings and is in breach of the EPF Act. We also call upon the "Professional Representatives" sitting on the EPF Board to uphold public interest by calling for the scheme to be reviewed.  The 3 professional representatives are Tan Sri Lee Lam Thye, Heng Hock Cheng and Halim Hj Din. The EPF Board of Directors must exercise their powers in the interest of the contributors, above any other interested parties, including the Federal Government.  The Directors must insist that any loans in this case, must be extended directly to the Federal Government and not to the individual low-cost house purchasers.  It is for the Federal Government to bear the responsibility of social welfare by providing a roof over the head of all Malaysians, and not the responsibility of the EPF. We fully support measures by the Government to assist the poor to own their own properties. However such measures cannot be at the expense of abusing Malaysian workers' retirement savings as specifically outlined in the EPF Act.

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