Tuesday, July 8, 2008

EPF to adopt cautious stance

BusinessTimes

The retirement fund wants to invest properly in the next six months, says its CEO, adding that the market has gone south since the first quarter

THE Employees Provident Fund (EPF) will adopt a cautious stance in equity investment for the rest of the year, its chief executive officer Datuk Azlan Zainol said.

The retirement fund, Malaysia's largest institutional investor, nevertheless hopes to give a reasonably good dividend this year. It paid out 5.6 per cent dividend to contributors last year.

"We are a bit cautious now as far as equities are concerned, and we want to invest properly in the next six months," Azlan said.

In the first quarter of the year, the EPF achieved investment income of about RM4.11 billion. It made the most (about RM1.06 billion) out of investing in equities.

Income from equities rose 51.2 per cent from the preceding quarter's.

Azlan said the market has gone south since then, adding that it has also been the trend worldwide.

"So when it comes to investing overseas, we are making some investments through our fund managers, but we have to ensure that the timing and markets are right."

Azlan said that up till last month, the EPF had only invested US$2.6 billion (RM8.5 billion) out of the US$8 billion (RM26.2 billion) approved for investment abroad.

Azlan was speaking to reporters after the opening of the International Social Security Association (ISSA) Southeast Asia liaison office in Kuala Lumpur by Deputy Finance Minister Datuk Ahmad Husni Mohamad Hanadziah.

A memorandum of understanding was signed between the EPF and ISSA. The liaison office is located at the EPF's headquarters in Jalan Raja Laut.

It will carry out planned activities guided by the general direction and coordination of the Geneva, Switzerland-based ISSA.

EPF chairman Tan Sri Samsudin Osman said the liaison office will pave the way for it to work with other pension funds in the region on training, exchange of research and ideas for further social security development.

Also present yesterday were ISSA president Corazon S de la Paz and secretary-general Hans-Horst Konkolewsky.

De la Paz said ISSA decided to locate the office here because of Malaysia's strong social security development. It is also one of the most advanced countries in the region and has spearheaded several innovations.

"In the area of investments, at the end of 2006, the EPF was Asia's fourth largest state-run pension fund", after those in Japan, South Korea and Taiwan.

The EPF's investments rose to RM318 billion and it made investment income of RM17.3 billion last year, de la Paz noted.

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