Thursday 28 Mar 2024
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KUALA LUMPUR (March 31): Bank Negara Malaysia (BNM) had requested to be removed from the investment panel of Social Security Organisation (Socso) due to conflict of interest, the Parliament was told.

Human Resources Minister Datuk Richard Riot said the request was made in a letter dated July 12, 2010 from the Central Bank.

"The proposal to remove BNM's representative from the Investment Panel was under the advice and the request of the BNM.  

"The request was made in a letter dated July 12, 2010. BNM as a regulator body on banking and financial matters, had informed that the involvement of BNM's representative in the Investment Panel will have a conflict of interest.

"The request not only happened with Socso, but also other statutory bodies such as the Armed Forces Fund Board (LTAT)," Richard told the Dewan Rakyat, while wrapping up the debate of the Employee's Social Security (Amendment) Bill 2015 today.

However, Richard said representative from the Ministry of Finance (MoF) can represent matters pertaining to government policies.

"Apart from representative from the BNM, representative from the Ministry of Finance is also a member of the Investment Panel. All the laws or government policies discussed in the Investment Panel can be represented by the ministry.

"The government doesn't easily remove any interested and skilled representative from the Investment Panel, which involves the management of the people's fund," Richard told the Dewan Rakyat.

He added that Socso, which was set up since 1971, adopted the investment principle of capital preservation and Shariah compliance, and would not make any investment that would affect the interest of the insurer.

The amendment on the Section 75A(2) provides for the removal of the sole representative of BNM from the Investment Panel.

Socso was set up to implement and administer the social security schemes under the Act, namely Employment Injury Scheme and Invalidity Scheme. It has evolved into a statutory body since July 1985.

The Dewan Rakyat has passed the Second Reading of the Bill in the parliament this morning, and it is currently at the Committee stage of the Second Reading, and it is expected to complete up to Third Reading today.  

The opposition MPs have raised their concerns over the removal, during their debate on the bill yesterday. Some of them have said having BNM's representative will ensure a better check and balance over the investments of Socso.

Another issue that was raised by opposition MPs was the addition of a new Section 74A in the Act, which allows Socso to set up a company or take over a company. Some have expressed concerns that this will be used to bail out companies.

However, Richard said the move was to improve Socso's efficiency in implementing it's objectives and functions.

"This amendment is in no way aimed at bail[ing] out any companies, as worried by the Yang Berhormat," he said.

Setting up or acquisition of companies by Socso is subject to governance and strict procedure, and cannot be done arbitrarily, and must obtain approval from the Board of Socso, the Human Resources Ministry and the Finance Ministry.

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