|Harakahdaily,||01 July 2013|
Jul 1: The Employees Provident Fund’s latest purchase of a mall for RM1.2 billion has been met with caution by PAS’s research head Dr Dzulkefly Ahmad, who warned that such investment was outside the pension fund’s forte which could ultimately pose risks to depositors.
“Any investment of public funds in private properties should be viewed with suspicion especially in this case where EPF is believed to make its first purchase of a retail mall in Malaysia,” he told Harakahdaily when asked for his response to news of the purchase, adding that without proper checks from equities watchdogs, private properties investments could end up in losses caused by dubious deals due to absence of proper governance.
Dzulkefly further said the latest investment could involve non-ringgit denominated which can entail greater risk to the depositors.
“There is also a danger of overcrowding and reducing liquidity in the local market if EPF continues to invest in the local properties especially by competing and borrowing local loans,” he added.
It has been reported that the EPF bought the mall in what used to be Vision City, widely seen as a ‘white elephant’ project on Jalan Sultan Ismail, for RM1.2 billion, or RM1,561 per square foot. The site is now being redeveloped as Quill City by privately owned Quill group, with the six-storey Quill City Mall to be owned by EPF and managed by Quill.
But recalling EPF’s “unwise” move when it borrowed £300 million – its first offshore loan – for its acquisition of three London properties in 2011, Dzulkefly (left) questioned whether under the Finance ministry, the fund was now being used “possibly to counter drying up of private investment to support slowing local economic growth”.
He also demanded to know why investment was being made “in non-traditional EPF territories” especially at a time properties went up significantly over the last three years thus “detrimental to the public funds”.
As such, venturing into “non-traditional territories” with a focus on properties could be bad for local capital market, he said.
Instead, Dzulkefly suggested that the pension fund, if truly flushed with funds, could indulge in “a kind of corporate social responsibility” (CSR) by putting money into affordable housing schemes. This he said should still attract profit, and can be carried out with a view to generate more houses by way of addressing acute shortage in the sector.