EPF Subsidiaries Record Losses?

Nine subsidiaries of the Employees Provident Fund (EPF) have posted losses for three consecutive years since 2021, with total losses reaching RM224.21 million in 2023. This is according to the Auditor-General’s Report 1/2025 (LKAN). 

The report revealed that these subsidiaries recorded losses of RM76.51 million in 2022 and RM49.76 million in 2021. Among them, KWASA Europe S.à r.l suffered the highest loss of RM158.42 million in 2023, followed by Ameen Direct Equity I, L.P (RM25.61 million), KWASA Europe-I S.à r.l (RM14.40 million), Naungan Sentosa Sdn Bhd (RM11.88 million), Kwasa Utama Sdn Bhd (RM8.61 million), YTR Harta Sdn Bhd (RM2.70 million), Kwasa Singapore Duo Pte Ltd (RM1.36 million), PPNK – Harta Sdn Bhd (RM840,000), and Common Icon Sdn Bhd (RM390,000).

 

According to the audit report, the losses in three subsidiaries—KWASA Europe S.à r.l, KWASA Europe-I S.à r.l, and Naungan Sentosa Sdn Bhd—were attributed to their capital structure, which mainly comprised shareholder loans. EPF, as the sole shareholder, generates returns in the form of interest income, which is used to pay dividends to contributors.

 

Ameen Direct Equity I, L.P., on the other hand, is a newly established fund set up in 2021 with a long-term investment focus and has yet to generate sufficient income to cover its operational expenses.

 

The LKAN report recommended that EPF strengthen its revenue generation efforts to ensure continuous operations based on a going concern principle and reduce its reliance on government grants.

 

It also suggested that EPF review the direction and business plans of its loss-making subsidiaries, particularly those that have been unprofitable for three consecutive years and have not yielded appropriate returns. Overall, EPF owns 55 subsidiaries, with 34 recording profits in 2023.

 

So long as EPF pays dividends of above 6%, there are no real concerns by contributors. But if this (dividends) were to drop to say, 3% then alarm bells will be set off.  Even a Royal Commission may be appointed. It is in the interest of EPF to communicate transparently on steps being taken or will be taken to reduce or turnaround those “sick” subsidiaries. And then report to contributors if it has succeeded or otherwise. Waiting for the next AG’s report is too late. Try to be pro-active!

 

Reference:

Nine EPF subsidiaries record losses for three consecutive years, Business World Today, 24 February 2025