The KWAP's decision to buy RM1 billion worth of ailing MAS-issued sukuk bonds is a yet another bailout attempt, says Sabah PKR
KOTAKINABALU: Why did the Board of Directors of the civil service pension fund (KWAP) pick-up the entire RM1 billion worth of MAS’ first issue of its perpetual sukuk (bonds) when the airline company is deeply in debt? Malaysian Airlines System (MAS) recently announcement a historic loss of RM2.52 billion for the financial year end 2011.
The governmet-linked company is now in crisis.
Slamming KWAP’s decision as yet another ‘bailout’ by the government, PKR Sabah secretary Dr Roland Chia Ming Shen said the move “will end up causing massive loss to the hard earned pensioners money.”
“Why are the Board of Directors of KWAP allowing pensioners hard-earned investment and savings to be invested in a company that has not had a profitability track record over the years?
“This smells like another bailout. It is the gross mismanagement of Malaysian Airlines System (MAS) that the authorities must look into and not using pensioners money for another bailout,” said Chia.
He likened the decision to the controversial way that the government had resorted to using Employees Provident Fund (EPF) savings to fund loans for the purchase of public housing projects in Federal Territories way back in Feb 2012.
He said the risks were too high and it was grossly unnecessary for the government to tap into the pensioners’ fund.
“With rising costs of living and also rising household debt up to 76%, such move will only cause more hardship to our pensioners in the near future,” he said.
Explaining the risks, Chia said that the perpetual bonds, known as Perps, although paying a rate of 6.9% were “not being rated”.
“These perpetual bonds don’t even carry a government guarantee. They are considered high risks and there is also no guarantee of repayment,” he said.
Chia said as far as PKR was concerned the move by KWAP is political motivated and will only be detrimental to the pensioners.