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IT is the Employees Provident Fund’s (EPF) duty to enlarge the wealth of its 13 million contributors and it should look at wherever opportunities exist, including in the US.
Datuk Dr John Antony Xavier head of the Strategic Centre for Public Policy at the Graduate School of Business, Universiti Kebangsaan Malaysia said it is EPF’s role to maximise returns of its shareholders by investing in emerging and dynamic markets so that at the end of the year it can offer dividends to the people.
“EPF’s investments are not limited to certain countries and it can invest where ever it can, in countries which are capable to get the best returns.
“The US economy is coming out of its doldrums and is among the fastest growing economies in the world especially now when US President Trump is cutting down taxes in its economy to give back to the people,” Xavier told New Straits Times in an interview today.
Xavier was commenting on Prime Minister Datuk Seri Najib Razak’s announcement in the US on Tuesday while meeting US President Donald Trump that the EPF had invested about US$7 billion in the US and plans to spend another US$3 to US$4 billion on infrastructure development in the next few years.
Meanwhile, Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said EPF made a good move as it needs to diversify its portfolio in order to reduce its portfolio risks.
“We noticed that the size of their portfolio is gradually rising and therefore, it is not economical to concentrate their portfolio investment solely in Malaysia as the risks are not spread out.
Mohd Afzanizam said from a macroeconomic standpoint, the US economy has been recording a healthy growth, of which in the second quarter, its gross domestic product grew by 3 per cent which is essentially higher than its long term average growth of 1.8 per cent.
The US Federal Reserve has also raised the Fed Fund Rate by 100 basis points since 2015, suggesting the economy does not need excessive monetary stimulus given the improvement and so there is merit to invest in the US from the macroeconomic point of view and the state of US infrastructure is in dire needs of reinvestment.
He added in 2017, the American Society of Civil Engineers (ASCE) has rated the state of US infrastructure at D+. This is unchanged rating compared to the last survey that was done in 2013.
According to the ASCE, the substandard infrastructure is costing each American family as much as US$3,400 in disposable income per year.
Traffic fatalities have also increased by 7 per cent from 2014 to 2015 with 35,092 people dying on Americans roads. Therefore, there is an urgent need to upgrade their infrastructure in order to be more competitive. So clearly, infrastructure investment is an area where EPF can part take to invest, said Afzanizam.
Meanwhile Asli Centre of Public Policy Studies chairman Tan Sri Ramon Navaratnam said EPF’s decision to invest is not a matter of what is right or what is wrong but rather a matter of priority.
“EPF has to earn an income and give back to the contributors in terms of dividends and it has to seek investment opportunities which will give the highest returns.
However he added the government must explain to the public the rationale behind its investments in the US so that they will get a clearer picture.