☕️ EPF 2023 Dividends - what you need to know

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

The EPF Special

The Employees Pension Fund (EPF) finally announced the dividends for 2023 — 5.5% for Conventional Savings and 5.4% for Shariah Savings. They are slightly below our expectations, but looking at the bright side, it’s higher than the headline inflation of 2.5% in 2023.

The biggest pension fund in the country made RM67.39 bil in gross investment income in 2023, compared to RM55.3 bil in 2022.

1. Equities asset class contributed 59% of the income and constitute 42% of the assets under management (AUM);

2. Fixed income asset class contributed 29% of the income and constitute 46% of AUM;

3. Real estate and infrastructure contributed 9% of income and constitute 7% of AUM; and

4. Money market contributed 3% of income and constitutes 5% of AUM.

EPF CEO Ahmad Zulqarnain Onn explained that the convergence of returns in both portfolios was because the fund’s Shariah portfolio saw an increase in returns on the back of the rally seen in US technology equities. The magnificent seven in the US, which are the biggest technology companies, played a significant role in driving performance. Many technology companies are also Shariah-compliant.

Total contributions in 2023 rose to RM102.8 bil and after accounting for the withdrawals of RM50.6 bil, net contributions turned positive in 2023 — to RM52.2 bil, versus net withdrawals of RM3.2 bil in 2022 and RM52.4 bil in 2021, and net contributions of RM20.1 bil in 2020.

Meanwhile, the median savings of Bumiputera, Indian and Chinese members grew in 2023.

1. Bumiputera: Increased to RM8,254 from RM4,900 in FY2022

2. Indian: Increased to RM17,375 from RM14,900 in FY2022.

3. Chinese: Increased to RM48,627 from RM45,800 in FY2022.

If you are wondering if EPF will ride the crypto bull market, the answer is no. EPF will not consider investing in digital assets. To be clear, it’s NOT because it’s digital assets; rather, the provident fund is focusing on cash-generating assets under its Strategic Asset Allocation (SAA) plan. It is also the reason why EPF does not invest in commodities, as it is a physical asset with no cash generation capabilities.

Together with Antler

If you’re currently building at pre-launch or pre-seed stage, you need to meet Antler — the world’s most active early-stage VC that recently expanded to Malaysia. As the earliest capital provider, they also have a global platform of founders, investors and advisors. Founders can expect to find a co-founder, validate their ideas, launch their startup and get funded — all in 10 weeks. Find out more and connect with them here.

3. IN MALAYSIA 🇲🇾

RM1 bil for new Bumiputera entrepreneurship fund
During the closing ceremony of the Bumiputera Economic Congress (KEB) on Saturday, PM Anwar Ibrahim announced that Putrajaya will allocate RM1 bil as seed funding towards the new Bumiputera entrepreneurship fund. The fund aims to ensure the growth of Bumiputera businesses in the high-value industry so that more companies such as Aerodyne, Les Copaque (Upin & Ipin), and Animosta (Mechamato, Boboiboy) could be created.

During the three-day KEB event, Bursa Malaysia chairman Abdul Wahid Omar warned the public that only one out of 97 listed companies in Bursa Malaysia in the last three years is bumiputera-owned. Commenting on the statement, former law minister Zaid Ibrahim reassured that the Bumiputera have nothing to worry about as Zaid believes that the Bumiputera group is the luckiest in the world. The Bumiputera controls everything in the country — the Government, the biggest banks and Petronas (Malaysia’s sole Fortune 500 company). Zaid said that the public should give the non-Bumiputera a break and let them participate in the economy.

Oh, Wahid Omar also suggested that discounts for rich bumiputras to buy luxury homes be scrapped and that the earnings from such a discount be channelled into a fund that would help lower-income bumiputra buy and own homes.

Bersatu to vacate the seats of non-loyal MPs
Bersatu party president Muhyiddin Yassin said that the party, via its secretary-general, will submit a notice to the Parliament to vacate the seats of its MPs that pledged support to PM Anwar Ibrahim. This notice will be submitted after the Registrar of Societies (RoS) approves the party’s constitution amendment. The amendment involved Clause 10, which dealt with the cessation of membership and the expulsion of its members who switched sides with immediate effect. The six MPs that pledged support to the Government are Dr Zulkafperi Hanapi (Tanjung Karang), Zahari Kechik (Jeli), Iskandar Dzulkarnain Abdul Khalid (Kuala Kangsar), Syed Abu Hussin Hafiz Syed Abdul Fasal (Bukit Gantang), Suhaili Abdul Rahman (Labuan) and Mohd Azizi Abu Naim (Gua Musang).

While Bersatu is kicking out its defected MPs, the Unity Government is slated to abandon those MPs too. Barisan Nasional (BN) chairperson and deputy PM Ahmad Zahid Hamidi stated that BN is prepared to put forward its candidates if by-elections are needed to be held if the seats are vacated. However, Zahid added that parliamentary regulations and the Federal Constitution do not allow these Bersatu MPs to be stripped of their seats despite Bersatu’s efforts to declare their seats vacant.

Anti Rent-Seeking Act to be established
Economy Minister Rafizi Ramli told the Parliament that Putrajaya intends to table the Anti Rent-Seeking Act by the end of the year. Previously, the Government studied the framework for the act and further clarification is needed on what rent-seeking entails, the levels of activities involved and complaint channels, among others. Rafizi said that existing laws, such as the Malaysian Anti-Corruption Commission Act 2009, Competition Act 2010 and the Companies Act 2016, are unable to curb the practice of Ali Baba. Rent-seeking is an economic concept that occurs when an entity seeks to gain added wealth without any reciprocal contribution of productivity.

Putrajaya agrees in principle to introduce home detention
Home Minister Saifuddin Nasution said that the Government has nodded in principle to implement the Licensed Release of Prisoners (PBSL) through home detention for prisoners serving jail sentences of four years and below. The move is done to reduce overcrowding at prisons. Saifuddin stated the PBSL program will prioritise inmates with chronic diseases, the elderly, persons with disabilities and expectant mothers. Previous programs such as the Parole System, Compulsory Attendance Order and Community Rehabilitation that aim to solve the overcrowding issue have churned out positive results with low recidivism rates, where only 1 out of 800 prisoners released return to prison. So, will Najib Razak benefit from this new program? Only time will tell. However, technically, Najib will not be eligible as he is serving a six-year jail sentence even after the partial pardon that he received.

Shorts

1. Aman Palestin asks for help
   Aman Palestin Bhd, whose 41 bank accounts amounting to RM15.87 mil have been frozen by the Malaysian Anti Corruption Commission (MACC) last November, is seeking help from the public to fund its legal battles. In a Facebook post by the organisation, Aman Palestin asked the public to assist them in its legal battles in the ‘effort to restore Aman Palestin’s good name and to be free from all accusations’. Just wow.

2. Search for MH370 to resume
   Putrajaya to resume the search for the missing Malaysia Airlines flight MH370 with a company called Ocean Infinity on a ‘no find, no fee’ proposal. The Boeing 777-200ER, carrying 239 people on board, has disappeared since March 8, 2014 (tenth anniversary this coming Friday), one hour after it took off from  Kuala Lumpur International Airport on its route to Beijing Capital International Airport in China.

3. Updates on the cabotage policy
   Transport Minister Anthony Loke said the Government will reinstate the cabotage exemption for foreign-flagged vessels conducting submarine cable repairs in Malaysian waters and is looking to make the exemption permanent. Loke stated that the exemption is important to attract foreign investments in the digital economy. However, Sarawak will reinstate the cabotage policy for ships providing cargo services from Peninsular Malaysia to Sarawak in a move to spur the growth of the local shipping industry in the state. The cabotage policy is a policy that governs the transport/shipping of goods or passengers between two places along coastal routes in the same country by a transport operator from another country. It is practised by many nations worldwide, including developed nations.

4. Sapura’s unit in Mexico declared bankrupt
   Sapura Energy Bhd’s Mexican unit, Sapura Energy Mexicana Sociedad Anónima Promotora de Inversión de Capital Variable (SEM), has been declared bankrupt by the Mexican court after failing to restructure its debts. However, the PN17 company said that its Mexican unit, SEM, would appeal against the bankruptcy declaration and claimed that a restructuring agreement had been reached with the majority of its creditors.

4. AROUND THE WORLD 🌎

In the court: Elon Musk vs OpenAI
Drama always follows Elon Musk. Musk has now sued ChatGPT creator OpenAI and its CEO Sam Altman, saying that they ditched the startup’s original mission to develop AI for the benefit of humanity and not for profit. The lawsuit alleged a breach of contract, as Altman and co-founder Greg Bockman originally approached Musk to create an open-source, non-profit company, but has now focused on making money. Musk is seeking a court ruling for OpenAI to make its research and technology open to the public and prevent the startup from using its assets for the financial gains of Microsoft or any individual. Microsoft has invested more than USD13 bil in OpenAI and there is no way it’s dedicating that investment for the benefit of humanity without milking gains out of it. 

Musk stepped down from OpenAI’s board in 2018 and co-founded xAI, a competitor to OpenAI in 2023, which has rolled out Grok on X, which Musk also owns. 

For some Palestinians, there’s (an expensive) hope to escape Gaza 
Think of a tour business by some opportunists, but in this case, one that helps, or rather exploits, Gazans to escape from their own land. A system has existed whereby Gazans pay Egyptian brokers to get on a list of people who can leave Gaza and cost between USD6,000-USD12,000 (RM28.5k-RM57k), with the upper limit allowing for exit within 24 hours. These figures are an exorbitant amount for most of Gaza’s population. To sources for funds, friends and family living in other countries resort to crowdfunding to pay for these escape tickets and, in some campaigns, saw amounts over USD100,000 raised. 

Raising the money is the first challenge. The next challenge is difficulty in getting the funds to Gaza and Egypt, as some of them saw their fundraising, bank, and PayPal accounts frozen. Hamas, the governing group in Gaza, has accused these companies and individuals of exploiting Gazans to pay exorbitant amounts. The Egyptian government said it is investigating these unofficial entities that are collecting fees from Gazans to escape to Egypt. 

UK’s controversial GBP370 mil plan to relocate asylum seekers thousands of miles away
Asylum seekers, in short, are those who escaped their countries due to dangers against their lives but are yet to receive legal refugee status - learn more here by Amnesty International. In the case of the UK, instead of housing these asylum seekers on their own land, they plan to house them 7,000 km away in Rwanda (see map here), a landlocked African nation which it plans to start deporting flights this spring. The aim of this policy is to deter people from crossing the English Channel in small boats, a key policy of PM Rishi Sunak. The UK’s spending watchdog, the National Audit Office, has disclosed a report on this scheme after nearly three years of refusals by PMs and other senior government officials to explain the full costs, citing “commercial confidentiality.” Something fishy is going on.

UK has entered into a GBP370 mil, 5-year deal with Rwanda to house these asylum seekers, but could cost a staggering GBP600 mil to taxpayers, working out to GBP1.8 mil for the first 300 people (just 1% of UK asylum seekers), in a report released by the National Audit Office. No asylum seekers have been deported so far as it has seen repeated challenges under European and UK laws. The Home Office defended its decision, calling it a “bold, long-term solution” and value for money. 

Shorts

1. Spanish travel influencer gang-raped in India
   Talk about rape on land and by humans instead. A female travel influencer with more than 200,000 followers on Instagram was attacked and raped by a group of 7 men. She was travelling in the eastern Indian state of Jharkhand with her male companion when the incident occurred. Police have identified the men involved and have arrested 4 of them. The couple shared their horrific experience here. Sexual violence targeting women is common in India with an average of nearly 90 rapes reported daily, meaning 1 woman was raped every 18 minutes in 2022, with 31,516 rape cases recorded. 

2. Vietnam’s biggest fraud case - USD12 bil
   A property tycoon, Truong My Lan, has been arrested and accused of orchestrating a USD12 bil fraud and paying off government officials and a bank she illegally controlled that disbursed loans to herself and her allies amounting to 11% of the nation’s 2022 GDP. Lan was behind Van Thinh Phat Group, one of Vietnam’s most prominent real estate empires. Investigators uncovered a notebook belonging to Lan’s personal driver, detailing USD4.4+ bil of cash being ferried between Feb 2019 and Sep 2022.

5. FOR YOUR EYES 📺

1. The admin of RapidKL’s social media team will either get a pay raise or be fired.

myrapidkl

View more on Instagram

2. PTPTPN’s admin should get a raise.

3. Take a tour of Rumah Kita, a house inspired by modern Zen/MUJI concept. According to the owners, it cost RM350k for renovation. Btw, the brand MUJI, derived from Mujirushi Ryohin, translates as “no-brand quality goods”, ironically.