Riot: BNM requested to be removed from Socso investment panel

by **Cals** Mon 04 Apr 2016, 02:04

Riot: BNM requested to be removed from Socso investment panel

By Chen Shaua Fui / The Edge Financial Daily | April 1, 2016 : 10:35 AM MYT

This article first appeared in The Edge Financial Daily, on April 1, 2016.

KUALA LUMPUR: It was Bank Negara Malaysia (BNM) that had requested to be removed from the investment panel of the Social Security Organisation (Socso) to avoid a conflict of interest when Socso dealt in matters that involved the central bank’s authority, Parliament was told yesterday.

“The proposal to remove BNM’s representative from the investment panel was under the advice and request of BNM. The request was made in a letter dated July 12, 2010,” said Human Resources Minister Datuk Richard Riot.

“Such requests not only came from Socso, but also other statutory bodies, such as the Armed Forces Fund Board,” Riot said, while wrapping up the debate on the Employee’s Social Security (Amendment) Bill 2015 yesterday.

The removal of the sole BNM representative from the Socso investment panel is provided for in Section 75A(2) of the bill.

The letter from BNM, read out by the minister, stated that the decision to withdraw its representative from the panel was in line with the enforcement of the Central Bank of Malaysia Act 2009 in place of the Central Bank of Malaysia Act 1958.

The decision, added the letter, was also in line with the mandate and responsibility of the central bank in carrying out its duties effectively, and to ensure there is no conflict of interest.

Riot, however, said there is also a finance ministry representative on the Socso panel, and this official can provide the necessary financial advice on matters pertaining to government policies.

During the debate on the bill, opposition members of parliament (MPs) expressed concern over the removal of the Socso representative, arguing that having the BNM representative provides for better check and balance on Socso’s investments.

Opposition MPs also voiced concern over the addition of a new Section 74A in the Act, which allows Socso to set up or take over companies, and to carry out and manage any project, joint venture, privatisation programme, scheme, enterprise or any other matter planned or undertaken by the organisation. Some MPs said this provision may be used by Socso to bail out companies.

Riot, however, explained that the provision was aimed at improving Socso’s efficiency and effectiveness in implementing its objectives.

He added that by establishing the company, Socso will have enabling cost to hire permanent staff and manage its Socso Rehabilitation Centre (SRC) in Melaka. The facility is to provide medical assistance to insurers under Socso.

As at December 2015, Sosco had RM23.3 billion in its funds.

“We have so much money, but we have never invested. If we invest in property, there will be more dividends,” he said when speaking to reporters at the Parliament lobby.

Asked if Socso would start undertaking investments, Riot said that for now, the company to be set up is mainly for the SRC, and that any other investments will come only in the future.

Setting up or taking over companies by Socso will be carried out according to strict procedures and not done arbitrarily, he said, adding that approvals need to be obtained from the Socso board, the human resources ministry and the finance ministry.