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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Is there a sinister move to privatise the EPF?

Is there a sinister move to privatise the EPF?

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sriranga

sriranga
Co-Admin
Over the past one year or so, there has been a concerted attack by an Opposition MP with strong US links to attack the management and reputation of the EPF.

On the face of it, it may look like a normal opposition exercise where the government and key government institutions are being attacked, to disturb and distract the smooth functioning of the economy.

However, certain connected factors now seem to be emerging, which when put together, suggests that the effort may be linked to a broader strategy of privatising the EPF, and handing over of the management of EPF funds to private parties.

A recent article by a well-known economist had pointed out, that for years, there has been a demand that the EPF, being the largest source of funds in the country, should invest in the stock market. Perhaps in response to those regular calls and in keeping with EPF's evolving investment strategy,there have been investments made by the EPF in the stock market since the early 2000's.

From about 2009, the pace of these investments in the stock market had accelerated, and it is seen that the EPF has now built up a sizeable portfolio with considerable long term value, although prices may be depressed at the current time.

Whilst this gradual accumulation of shares by the EPF was taking place, some international fund managers, may have got wind of new opportunities of managing a fund of this size and nature, and therefore quite naturally,some of them have been known to be lobbying in various informal groups to obtain a piece of this investment action.

However such a "hand over" of the investment function by the EPF to outside foreign parties did not seem to be forthcoming, and the EPF appeared to be quite content to handle its own investments.

As a result, a new strategy seems to have been developed during the past year or so, by some of these interested parties to wrest control the EPF funds from the Monetary Board and entrust the funds to outsourced private sector parties, for management.

This new strategy seems to involve an informal lobby by a few connected persons in certain business circles, while simultaneously a parallel cry that the EPF is mismanaging its funds is being raised by a vociferous group led by an Opposition MP closely connected to the US.

The fact that the EPF has been delivering substantial returns, which have been well over the rate of inflation and much higher than that credited by other similar funds during the past five years, has been conveniently ignored, and these groups have since been relentlessly pursuing their goal of discrediting the EPF. In the meantime, around September 2011, a well-known US based consultancy firm, Mckinsy and Co. had been given a consultancy assignment, said to be worth over Rs.150m by the Colombo Stock Exchange, to propose strategies to broaden the retail participation in capital markets and build a stronger unit trust industry. This consulting firm has produced an action plan in December 2011 which sets out what they call "three key transformational themes".

Interestingly, but not surprisingly, the most important theme set out by them is to outsource the current in-house portfolio management of the EPF and ETF to private sector unit trusts.

Although this revolutionary idea has been mooted rather openly by a well-known consulting firm, it is likely that those who were seeking this outcome would have realised that this so called transformation was not going to take place easily, given the stance of the present Government.

In that background, those who were plotting such a move behind the scenes,may have come to the conclusion that this transformation as they call it, could take place only if sufficient pressure was brought upon the Government and the Monetary Board,through a systematic allegation of mismanagement of EPF funds, coupled with a call for a change in management by influential agencies.

That may perhaps explain why, after the report of Mckinsy and Co. was issued in December 2011, the attacks on EPF have been stepped up, with the effort being spearheaded by the US linked, anti-China, Opposition MP.

The suspicion that has now arisen is, as to whether these constant attacks on the EPF are a part of a broader plan set in motion by certain foreign interests to wrest control of the largest Fund that is owned by the people of this country, which accounts for about 20 percent of the country's financial sector.

Another factor that may merit consideration is that the management fee which is normally charged by a unit trust or a fund management company to manage a fund like the EPF is around 2 percent of the fund value. On that basis, since the value of the EPF is now known to be over Rs.1,000 billion, those who are planning this move may also be having visions of pocketing around Rs.20b or $ 150m per annum, as their fees, as well. Needless to say, those who may have laid plans for an exercise of this nature, would not hesitate to handsomely compensate any persons who engineer such a lucrative deal for them.

That is why,j just like terrorist links were investigated, this type of suspected underhand economic attack must now be seriously inquired into, so as to ascertain whether there is a connection between the attacks on the EPF and the attempt to outsource the management of EPF funds to private parties.

In these circumstances, all stakeholders must now be highly vigilant about the efforts of these vociferous persons who may be the cat's paw to carry out a sinister contract to transfer control of one of the largest national assets that has been carefully safeguarded for over 50 years, to private parties with vested interests.
http://www.sundayobserver.lk/2012/07/08/fin29.asp

http://sharemarket-srilanka.blogspot.co.uk/

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
No doubt in future the super power of our country will think about privatising the Parliament.
Bulls**t administration elected by us.

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
If they can not manage it properly, wise to give to private sector management.But only the management with a management fee, and not the ownership. EPF money belongs to the workers,How can the government sell a property which it doesn't own.

Whitebull


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Redbulls wrote:No doubt in future the super power of our country will think about privatising the Parliament.
Bulls**t administration elected by us.

I think you have misread the article.This is about a plot supported by US - linked opposition MP(everyone knows who he is) to open the pathway to privatise this fund.

Seems super power is against that.

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
@Whitebull wrote:
@Redbulls wrote:No doubt in future the super power of our country will think about privatising the Parliament.
Bulls**t administration elected by us.

I think you have misread the article.This is about a plot supported by US - linked opposition MP(everyone knows who he is) to open the pathway to privatise this fund.

Seems super power is against that.

I'm criticising those who were elected by our vote drag the affairs to this extend.
(politicly backed appointments and corruption paved the way to this situation no?)

bullrun

bullrun
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@sriranga wrote:Over the past one year or so, there has been a concerted attack by an Opposition MP with strong US links to attack the management and reputation of the EPF.


Interestingly, but not surprisingly, the most important theme set out by them is to outsource the current in-house portfolio management of the EPF and ETF to private sector unit trusts.


Although this revolutionary idea has been mooted rather openly by a well-known consulting firm, it is likely that those who were seeking this outcome would have realised that this so called transformation was not going to take place easily, given the stance of the present Government.

Another factor that may merit consideration is that the management fee which is normally charged by a unit trust or a fund management company to manage a fund like the EPF is around 2 percent of the fund value. On that basis, since the value of the EPF is now known to be over Rs.1,000 billion, those who are planning this move may also be having visions of pocketing around Rs.20b or $ 150m per annum, as their fees, as well. Needless to say, those who may have laid plans for an exercise of this nature, would not hesitate to handsomely compensate any persons who engineer such a lucrative deal for them.

That is why,j just like terrorist links were investigated, this type of suspected underhand economic attack must now be seriously inquired into, so as to ascertain whether there is a connection between the attacks on the EPF and the attempt to outsource the management of EPF funds to private parties.

In these circumstances, all stakeholders must now be highly vigilant about the efforts of these vociferous persons who may be the cat's paw to carry out a sinister contract to transfer control of one of the largest national assets that has been carefully safeguarded for over 50 years, to private parties with vested [/b]interests.[/b]
http://www.sundayobserver.lk/2012/07/08/fin29.asp
Those who started selling all government properties now cry over public properties! I strongly believe the facts in this letter. The allegation against EPF definitely must associate with private a agenda like this.

bullrun

bullrun
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@WildBear wrote:If they can not manage it properly, wise to give to private sector management.But only the management with a management fee, and not the ownership. EPF money belongs to the workers,How can the government sell a property which it doesn't own.


Yes, to a person like Lalith kothalawala, Sakwithi or even Daduwan Mudalali !
No patriotic person will allow this culprits to sell workers only property to robbers who all ways think about the profit. How many number of companies vanished in the soil of this country with so called efficient private sector management?
Could you be able to invest your money in stock exchange without any losses? Private sector means you and me. We all are looses. How can we teach to others? All super power western countries are struggling with various types of economics problems at the moment. How can they lead us? EPF is a property of working class of this country. It does not belong to me or to you who always think to buy at low and sell at high to whoever.


wiki


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Given facts may be true.

It is better to have private sector involvement in development activities. But not to manage these funds.

And what most of the concerned citizen of this country wanted is to investigate and punished the culprits who mismanage the funds.


aj


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
This article is published in Government propaganda newspaper. These newspapers are only good for looking up classifieds. Although Vijaya newspapers are taking over even classifieds now. Government wants to show everything EPF, central bank did was right, anything else is unpatriotic or some CIA, UFO, US conspiracy. Wrong thing is wrong. No matter what.

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@bullrun wrote:
@WildBear wrote:If they can not manage it properly, wise to give to private sector management.But only the management with a management fee, and not the ownership. EPF money belongs to the workers,How can the government sell a property which it doesn't own.


Yes, to a person like Lalith kothalawala, Sakwithi or even Daduwan Mudalali !
No patriotic person will allow this culprits to sell workers only property to robbers who all ways think about the profit. How many number of companies vanished in the soil of this country with so called efficient private sector management?
Could you be able to invest your money in stock exchange without any losses? Private sector means you and me. We all are looses. How can we teach to others? All super power western countries are struggling with various types of economics problems at the moment. How can they lead us? EPF is a property of working class of this country. It does not belong to me or to you who always think to buy


Owners and contributors of the fund should decide the fate of their savings, and not the patriotic government or influential private sector parties. That's s why it is important that the workers,their representatives, trade unions come up with a strong voice than present. If they like the way the fund is managed at present by the central bank related parties then it s ok, at the same time if they do n monkey ot happy with current management, the fund owners should decide how it should be managed. It's always prudent to look at how other countries manage their pension funds successfully. If you think private sector have failed all over the world, then who has created the massive wealth and economies like USA,UK, CHINA OR RUSSIA, India ,Singapore etc.. I'm sure you are not suggesting to give the economy to Marxist loosers. By the way I've been an investor in CSE for more than 10 years and I'm not a loser in anyway..



bullrun

bullrun
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
I'm sure you are not suggesting to give the economy to Marxist loosers. By the way I've been an investor in CSE for more than 10 years and I'm not a loser in anyway..



[/quote]

I am happy about you. But let us allow the workers to decide on their faith.

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@bullrun wrote: I'm sure you are not suggestin to give the economy to Marxist loosers. By the way I've been an investor in CSE for more than 10 years and I'm not a loser in anyway..


I am happy about you. But let us allow the workers to decide oheir faith.


[/quote]


that's what I' m suggesting too. Let the fund owners to decide, as what happened in the issue of proposed pension scam for EPF members, which was aimed at robbing their money silently. I think most of us agree that the large portion of it's money should be in risk free government securities. And most of us do not against investing EPF In stock market, but most of us do not agree with their investment strategy in last few years. They bought plenty of junk shares which have no fundamental value at the price they purchased. and then Recently EPF involved in a hidden agenda to get larger stakes of private banks and control them over, which will detrimental to the whole economy of the country and the workers should come up with strong voice against them. I think other than the junk stocks they bought recently, their stock portfolio is satisfactory with a good long term value.As a contributor to the EPF, I personally think there is no harm investing up to 10-15% of the fund in equities provided that they have followed investment basics and not hidden agendas.

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