Stop repeating mistakes

GOOD governance is a utopian ideal for most Sri Lankans, but when that extends to respected institutions such as the Central Bank and allows the possibility of misuse of the hard-earned money of millions of people in this country, it is time to do something about it.
Under the Employees Provident Fund (EPF), the Central Bank has to release an annual report revealing all financial details regarding it, including transactions, returns, assets and liabilities. It is therefore worrying when the Central Bank has not even released the report for 2010 and neither the Auditor General nor other stakeholders have a clear idea of the state of Sri Lanka’s largest fund.

The proposed Amendments to the EPF Act that are to be tabled before Parliament on 18 November have opened a somewhat forgotten can of worms. It will be remembered that 21-year-old Roshen Chanaka died needlessly because the Government did not want to be transparent and discuss the stipulations of the private sector pension plan that was snuck into Parliament early last year.
After much protest, billions of rupees worth of losses as investment zones closed shop and repaired their damage along with Army and Police moving in, the Bill was hastily withdrawn – but not removed from the order paper of Parliament. This means that the Government has the power to move the Bill into Parliament with little or no prior notice, leaving the stakeholders at a very jittery stage.
There is little doubt then that the mention of an “insurance or pension plan” in the proposed Amendment sends chills down people’s spine. As a Government that has a strong reputation for hiding controversial acts, issuing midnight gazettes and staunchly stemming all criticism, it is understandable that the people are perturbed by the outcome of this act. Could it be another step towards a guarded private pension plan?
Moreover, using the hard-earned money of the people to build a 30-storey high rise for the EPF, ETF and Labour Commission needs to be reassessed. Is spending billions of the people’s money really worth it? There are plenty of other more worthy causes, should the authorities consider them.
In its Road Map for 2012 the Central Bank has outlined ambitious plans for the EPF. The report says that the focus of the EPF will be to ensure a significant positive real rate of return to the members, with the benchmark to be at least 1.5% over inflation in any five-year period. It also wants to ensure the safety of the fund and provide efficient service.
The investment portfolio is to be diversified into listed and unlisted equities, corporate debt and securitisation products, long-term Government bonds and explore projects of mega project financing.
EPF growth is estimated to be 14% in 2012. Return on 2011 investments is projected to be 12.3%, but this is expected to reduce to 11.1% this year. Return rate to members is provisionally 10.5% in 2011. Online member contributions are expected to increase from 25% of contributing people to 75% by year end. Currently 62,000 employers are with the EPF and this figure is expected to rise to 125,000 by end 2012.
This is all well, but the Central Bank has a strong charge and must clear its reputation with better governance, while the Government must allow time for discussion and change among stakeholders before running the risk of repeating mistakes.