Official Launch E-PPA SYSTEM JW Marriott HOTEL 11 May 2010 Speech by Y.M. TUNKU DATO YA ACOB TUNKU TAN SRI ABDULLAH (President of the FEDERATION OF INVESTMENT MANAGERS MALAYSIA) Yg. Bhg, Tan Sri Azlan Zainol - Chief Executive Officer, EPF Dato Ibrahim Taib - Deputy Chief Executive Officer (Operations), EPF Datuk-Datuk, Chief Executive Officers and Directors of FIMM Member Companies, Distinguished Guests, Ladies and Gentlemen Members of the Press Assalamu alaikum wbt and a very good afternoon. It is my great pleasure, on behalf of FIMM, to be present here today, to witness the official launch, of the Elektronik-Pilihan Pelaburan Ahli, or E-PPA system. The EPF Members Investment Scheme (or EPF-MIS) was launched, fifteen years ago, in 1996, with its primarily objective, of giving EPF members, an opportunity to seek, higher returns, with their savings in the
EPF. Being principally a retirement savings scheme, the EPF investment methodology, is highly biased toward capital preservation, and as such, needs to carry, a very low risk profile, and consequently, generates a conservative rate of return. The EPF, by its very nature, is principally, a Savings Scheme. Recognizing, that inflation plays, a significant negative role, in the future living standards of retirees, the EPF was keen, to allow its members, to earn a higher rate of long-term returns, much more than could be earned, though an almost risk-free savings scheme. To do that end, EPF members needed to Invest, rather than Save. So in 1996, the EPF-MIS was launched, which provided its members, access to invest, at least, a part of their EPF Savings, in approved Unit Trust funds. Being a low cost mechanism, that allows the Rakyat to Invest, in the Capital Markets, the Unit Trust industry was an ideal instrument, that gave EPF members, access to the same long-term rates of returns, that would be expected, from professionally managed funds, but in smaller sizes, that were far more affordable, for every-day citizens. And over the past 15 years, the unit trust industry, has played a significant role, in earning better long-term returns, for members of the EPF, for it has been proven, over and over again, that if one were to take, a long-term view of investments, investing with unit trust funds, has always out-shorn, the returns from bank or other Savings Schemes. It is clear, that over the past 15 years, EPF members, have grown to become much more knowledgeable, more mature, and more sophisticated, in terms of their investments in Unit Trust Funds, and have become accustomed, to assume responsibility, for the active management, of part of their EPF savings.
For your information, as at March 2010, the Net Asset Value (NAV) under the EPF-MIS, is RM 15 billion, which represents 7.4 % of the total unit trust industry s NAV, of RM 204 billion. In terms of numbers of transactions, total withdrawal-applications in 2007 were 330,000, and are expected this year, to exceed 500,000 applications a year. By 2015, this number is forecasted to exceed 1 million withdrawal transactions a year. With such a huge volume of transactions, no organization, EPF or otherwise, will be able to provide a complete, and professional service to its members, if it were to continue to process its work, on a manual basis. On this note, I would like to congratulate the EPF, in taking the initiative, to adopt the E-PPA system that we are launching, today. Through the use of highly secure, on-line computerized technology, the EPF is now, in the forefront of modernity, customer-service satisfaction, and cost mitigation. The EPF today, is a role model, for other pension-schemes to emulate and respect. Gone is the manual process, of physical documentary submission of withdrawal applications, by unit trust companies to the EPF. Gone is the EPF system of physical retrieval of member files to enable in-house processing of withdrawals. Gone is the physical process, of human eyeball confirmation, and matching of finger-prints, to determine authenticity of member identity. And gone, is the process of approvals, payment requisitions, cheque-raising, and physical delivery of payment and receipts. To unit trust management companies. Everything is now done electronically. With the E-PPA system, the EPF is now, able to heighten its service levels applications can now be fully verified, approved and disbursed in full,
within 2 days, as compared, to the previous manual system s, turn-around service time, of 15 to 20 days. With the E-PPA system, the EPF is now, to save a huge amount in operating and administrative costs, for human intervention is now, almost completely, no longer required. On this note, I am happy to say, that even the cost of the E-PPA electronic on-line system, is now fully borne, by participating, unit trust management companies. Today s official launch of the E-PPA system, (Electronik Pilihan Pelaburan Ahli) marks a great milestone, on the joint efforts of FIMM and EPF, in raising our service-level offerings, to EPF members. Being an online system, that enables the electronic submission, processing and payment of withdrawal applications to invest in unit trusts, the E-PPA system, is one of the EPF s long list of successes, that it can truly be very proud of. Technology-wise, the E-PPA system, is supported, by a substantially robust framework, and very high security protocols, that has proven to function efficiently and effectively, at all times. I am happy so say, that since the soft launch, of the E-PPA system, several months ago, all users of the system, including Unit Trust Management Companies, the EPF and their respective supporting staff, have developed a high degree, of confidence in the reliability of the system. The launching, of this online system, demonstrates the unit trust industry s 100% commitment, to continuously improve, our services, our products,
and our systems, for the benefit, of the EPF members, who are permitted to participate, in the EPF-MIS. The cost for the system, is by no means cheap, and reflects the strong undertaking, and desire, of FIMM, and all the its Member Companies, to build a faster, more robust, more trustworthy, and more efficient system, for the benefit of all stakeholders, be they, Investors, the EPF itself, or the unit trust industry. FIMM and our Member Companies, will continuously review, and ensure, that the unit trust industry, can operate in a healthy, progressive, and rewarding environment, that guarantees that all investors, are always well informed, well protected, well services, and ultimately, handsomely rewarded, for choosing to Invest, for the long-term, through the Unit Trust Industry. I would like to take this opportunity, to extend my sincere appreciation, to team in the EPF, and the FIMM Committee Members and management staff, who have played such a pivotal role, in ensuring the success, of the E-PPA system. I am proud of you, for the people in the EPF, and the people in FIMM, have proven, that by working together, with a focused objective, can overcome any challenge. I would also like to extend, my appreciation, to the other business partners, who have played such a significant role, in guaranteeing E- PPA s success. Companies like Rexit Software Sdn Bhd, Yasmin Teknologi Sdn Bhd, Petraware Sdn Bhd, and RHB Islamic Bank Bhd, should be congratulated for their input, contributions and support, in developing, and maintaining, the E-PPA system.
Once again, I thank all of you, for coming to this afternoon s launch, of the E-PPA system. Also a special word of thanks, to EPF s CEO, Tan Sri Azlan Zainol, for gracing this function. Tan Sri, you should be proud, of your people in the EPF, who have worked on this project, for they have achieved great success today, for the whole of EPF, in terms of cost-savings, and for all its members, in terms of service-level excellence. Who know? The service level, that EPF can now provide its members, is so high, that I am not surprised, if one day, the EPF will allow EPF-MIS withdrawals, to be made on a monthly basis, as opposed to the current, 3- monthly basis, as an added super-service for all its members. The sky is the limit, and the EPF, can achieve much, much more - Syabas EPF! On that note, let me end by saying, that FIMM, is proud to play its role, in the E-PPA system, and that I believe, the launch of this system today, is truly 1Malaysia In Action. Thank you.