14/2015 – When is enough, enough? (Unpublished article)

by Tan Thiam Hock

(Author’s note: This article was not published in The Star)
Saturday, 25 July 2015

As the days draw nearer to my 55th birthday, I am undecided on withdrawing my entire lifelong savings from the Employees Provident Fund. No it is not a matter of trust. My issue is with yields. Can I get a better yield than what EPF is giving me? And it is about timing. And perception.

As an entrepreneur for more than half my adult life, I have never considered EPF as my main source of retirement income. That would be a failure mentality of an entrepreneur. I am supposed to make enough money after 32 years of entrepreneurship to retire comfortably.

But money is money and this is my money, saved over 32 years. And I do thank the EPF for managing my money well, growing it with decent compounded interest.

But there are signs of concerns that changes are forthcoming in the way EPF is being managed at the moment. Or is it just my perception?

The recent attempt to suggest extending the withdrawal age to 60 years does not bode well for me. With my terminal disease, statistically I have only a 5% chance of surviving beyond 5 years which means I might not be around to collect my lifelong savings.

EPF is already propping up the entire stock exchange in Malaysia and with more than RM 2 billion inflows a month, yields on a percentage basis of total funds will diminish as good investments are hard to come by. The investment team will have to work much harder and look beyond Malaysia for higher yields.

Loans to 1MDB (and its companies) is just a small portion of its funds and it is guaranteed by the government. Or is it? However a large portion of its funds are invested in Malaysian Government Ringgit Bonds and unless the government goes bankrupt, the investment will be rock solid.

Unlike Greece, Malaysia can print its own money and technically speaking like USA will not go bankrupt. The main worry will be the devaluation of the Ringgit due to excess printing and supply to the market. Then our money is worth nothing versus world currencies.

But we have a solid and reliable Central Bank which has governed our monetary policies so well over the years. But is our Central Bank still reliable? Is it managed by professional technocrats or is it managed by self serving politicians? Perception of credibility is crucial to a national institution like a central bank.

So what can I do with my EPF withdrawal?

At best, I can get 4.2% per annum on a Fixed Deposit with a commercial bank. I should invest in our stock market but my brokers tell me the index is over valued at the moment. In my younger days, I would have plonked the whole sum into my trading business either expanding or extending my product lines.

But times have changed. So has my perception of Malaysia. I am confused at the moment. Very confused. Is anybody managing the country? Are the laws of this land equivocal? Ambiguous and subject to personal interpretation?

If as a local businessman, I am not comfortable with investing in my own country, what more do you expect from foreign investors? The current political climate in our country is not conducive to attract new investments. The game of perception played by all political parties have got to stop.

Anybody and I mean anybody who is guilty of any crimes must be brought to justice. Only when our Judicial branch is perceived to be independent of the Executive and the Legislative, the investment confidence will return to this country.

To all the young entrepreneurs, you should include analyzing political risk in your considerations when you start a new business or when you intend to expand overseas. This charade happening right before you can happen anywhere especially when the politicians think they own the country and can do anything they want.

Thread carefully when you invest overseas. Always have an exit plan in mind. Always remember personal safety is top priority. You might have to leave your assets behind when you have to leave the country urgently so minimize your fixed asset investment. Multinational companies like Proctor & Gamble even leased computers and office furnitures so you will find minimum assets in countries where they trade.

My advise to you is to avoid corruption deals with government officials and politicians as the penalty is high. With an active social media and strong anti money laundering acts, you will be caught sooner or later either as the main actor or as an accomplice. Either way, you are burned for life. No amount of money is worth the shame it will bring to you and your family. And money is poor compensation for loss time in jail. Furthermore it is worth less by the time you get out of jail.

So start your entrepreneur journey the hard way. Play proper, play smart and play clean. You might make a lot of money, you might not. But I guarantee you will have a sense of satisfaction that you have done right and you have done well. How much wealth and savings do you really need to retire comfortably anyway?

So when is enough, enough?

I guess that depends on the individual really. Some ladies would be thrilled to death just to own a LV bag, some are not satisfied with even 10 Birk bags. That’s ok. As long as you have bought it with your hard earned money.

As for me, I have enough of this political charade.

I hope the righteous will triumph and the truth will prevail. Enough is enough.