Malaysia provident fund at a crossroads

The EPF has options other than investing abroad to safeguard its investments, says Watson Wyatt.

For the past two years, Watson Wyatt has been researching how Malaysia's M$200 billion $53 billion Employees' Provident Fund can reverse declines on its returns on investment, with a final report and recommendation due in March, 2003. The final result is likely to de-emphasize investing abroad and look at ideas such as contracting investment responsibility to companies and workers or creating a private pension plan akin to Thailand's.

Danny Quant, Watson Wyatt's managing director in Kuala Lumpur, says the EPF's main problem is that it is a victim of its own success it is too big. With up to 20% of it invested in local equities, it now owns around 8% of the Malaysian...

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