What are the steps that have been, are being and that will be taken to restore confidence in the local market?
- Continuous efforts have been and are being taken by the Securities Commission to increase the public's trust in the local stock market, among which is to ensure a high level of transparency among listed companies in terms of adequate dissemination of information and accurate in relation to the activities and operations of the company to investors and shareholders so that they can make amore effective investment decisions. In addition, the directors of listed companies are required to play a more responsible role in terms of corporate governance and elements based on the elements of best practices. Report on code of best practices and the method of implementation was released in 1998. Amendments were also made to the listing requirements in relation to parties with connection and interest to the transactions in order to protect the interest of listed companies and minority shareholders from loss. On the economic recovery period, the Government expects the economy will recover quickly based on the positive development of measures taken by the Government to strengthen the economic base and stabilise the financial markets by improving the balance of payments, increase export competitiveness, reduce imports and promote the use of local goods. In addition, cooperation from all parties including the private sector and trade unions is essential in helping the Government to revive the nation’s economy.
- The Government has no information about the profits generated by Malaysian investors abroad and the amount brought back. For companies that have invested outside the country before the fall of the Ringgit, they have the opportunity to obtain good returns if the assets owned outside of the country is sold and the proceeds repatriated back to Malaysia.
What are the steps taken to reinvigorate the stock market in the country?
Please indicate also the extent of the stock market crash and its affects on the economy of our country and what are the main reasons for the stock market going bust.
- The Government took steps to rebuild investor confidence in the stock market through the action plan provided the National Economic Action Council (NEAC), which was announced on July 23, 1998. The main objective of the Action Plan is to stabilise the ringgit and the stock market, strengthening financial markets and economic fundamentals. The Government will also ensure a high level of transparency among listed companies. Directors are required to play a more responsible role in terms of corporate governance and based on the elements best practices.
- The stock market is one of the source for local companies to raise capital for business expansion, thus contributing to the nation’s economic growth. Continuous fall of the stock market has dampened investor sentiment and interest on the purchase of shares. This resulted in companies finding it difficult to obtain capital to grow their business. The fall of share prices has also strained the companies that have local bank loans made by mortgaging company stocks. This incident has been difficult for these companies to continue their operations.
- Among the main reasons for the stock market decline are:-
- a sharp decline and the volatility of the ringgit since the beginning of the crisis which since July 17, 1997 until the present the value of the ringgit has depreciated by 38%;
- non-encouraging income growth prospects of companies due to the economic downturn have caused foreign fund managers becoming less interested in KLSE and have reduced their investments in KLSE;
- impact of market contagion in the region have continued to dampen the sentiment of foreign investors in this region, including Malaysia. Foreign investors still consider the risks of investing in this region are too high given the economic uncertainty, political, social, financial of these countries. Also the effect of contagion from other emerging markets like Latin America, South Africa, South Asia and Russia have also played a role; and
- there exist a more attractive investment opportunities in the United States and the Europe region.
- To assist companies facing difficulties, Government has provided a number of programs, among others, setting up the Loans Monitoring Unit and the Business Problem Advisory Unit at Bank Negara Malaysia (BNM) and the Ministry of Finance to ensure that credit to companies are not affected; Small and Medium Industries Fund (TIKS) amounting to RM1.5 billion which commenced operations since January 1998 to provide loans to companies to continue operations and provide flexibility to non-Bumiputera companies to buy troubled Bumiputera companies to enable these companies to obtain capital to continue operations.
Will the Employees Provident Fund (EPF) review the withdrawal of money for its members who have lost their jobs?
A withdrawal program should be implemented by the EPF to lessen the burden in time of economic downturn.
- EPF has no plans to allow contributors to withdraw their savings for everyday needs and their children's education because it is inconsistent with the objectives of EPF. EPF savings are for retirement purposes and any new withdrawal scheme for non-retirement purposes will affect and reduce the amount of members' savings for their retirement.
- To ensure that members' savings are sufficient to make a living during retirement, EPF has had to limit the withdrawal before retirement. Withdrawals allowed now are for housing, health and investment through the Fund Management Institution is sufficient. Therefore, the withdrawal to meet the daily needs should not be allowed.
Complaints received about the contributions that are not paid to the Employees Provident Fund (EPF)
How many complaints were received about the contributions not being paid to the Employees Provident Fund (EPF) in every state. Please specify: -
- EPF takes serious attention on employers who default. EPF enforcement machinery ensures that employers pay contributions according to the EPF Act 1991. For the period January to March 1998, EPF had received 3.703 complaints about the failure of employers to contribute. Total complaints received in 1997 was 14.469 cases, in 1996, 19.455 cases and 21.880 cases in 1995. At the end of March 1998, the cumulative balance number of cases under investigation or in court is 20.779.
- EPF ensures that complaints received from members, especially in the case of defaulters be investigated promptly. However, EPF do not rely solely on the complaint to safeguard the interests of workers. EPF through its computerised information system also monitors the employers' monthly payments. The system is able to detect employers who fail to contribute and EPF eaxminers will then investigate.
- In March 1998, out of 294.710 registered employers, it was found that 14.418 or 4.89% of employers had failed to pay a month of contribution or more. At the end of 1997, 4:44% or 13.143 of 296.299 registered employers had failed to pay a month or more contributions. In the first quarter of 1998, a total of 425 employers have been sued in court for failing to remit, while in 1997 the number of employers who are sued were 1.672.
- EPF also made door to door spot checks on business premises to ensure that employers are responsible contributors and registered with the EPF, the right contributions made to for all employees. In 1997, EPF have inspected 100.656 business premises, where 3.77% or 3,791 employers were not registered with the EPF. Assessment of outstanding employers contributions amounted to RM7.8 million. In March 1998, EPF had visited the 20.969 business premises and 2.26% or 473 employers were found not registered with EPF and the amount of assessment contribution arrears was RM1.4 million.
The breakdown of complaints received by the state are as follows: -
STATE YEAR 1995 YEAR 1996 YEAR 1997 JAN-MAC 1998 Perlis 207 104 97 83 Kedah 823 1,675 940 68 Pulau Pinang 1,020 894 795 333 Perak 1,222 765 469 90 Selangor 6,935 5,983 4,640 1,266 W.Persekutuan 6,019 5,895 4,746 1,214 N.Sembilan 441 287 369 39 Melaka 69 106 82 0 Johor 1,874 1,156 860 404 Pahang 307 265 233 131 Terengganu 610 197 147 28 Kelantan 749 547 149 0 Sabah 934 1,002 463 0 Sarawak 670 579 479 47 TOTAL 21,830 19,445 14,469 3,703
What is the rate of non-performing loan (NPL)?
What is the rate of non-performing loan (NPL) for the banking sector in our country and to what extent has Dana Harta Nasional played in reducing NPLs?
At the end of May 1998 Non-Performing Loans (NPLs) of the banking sector was 8.5%. With Danaharta, this will reduce the burden by banking institutions to manage NPLs. NPL sale will also allow institutions to concentrate their efforts on lending activities.
What is a derivatives market, the institutions operating and the benefits of its products?
The derivatives market is a financial instrument that provides a safe and effective risk management tools in commodity products and financial futures. It manages its exposure to the fluctuations in the options market, interest rates, stocks and stock index futures markets.
Malaysian derivatives market is the Malaysian Derivatives Exchange (MDEX), the result of a combination KLOFFE and COMMEX.
Benefits of derivative products are:
- Provide facilities to investors who need an investment tool that is innovative and flexible and can take the opportunities of global markets;
- Offers above-average returns and portfolio protection to investors, and
- Offer facilities for hedging activities that can produce an efficient financing for the investment portfolio.