The Government has been urged to establish a dedicated regulatory agency to oversee institutions managing public funds and savings, following governance weaknesses highlighted in the Royal Commission of Inquiry (RCI) report on Lembaga Tabung Haji (TH).
Datuk Dr Radzi Jidin (PN-Putrajaya) said the proposed comprehensive regulatory framework should not be limited to TH, but also cover institutions such as the Armed Forces Fund Board (LTAT), Employees Provident Fund (EPF), Retirement Fund Incorporated (KWAP), Permodalan Nasional Berhad (PNB) and the National Higher Education Fund Corporation (PTPTN).
He said Malaysia currently lacked a clear and comprehensive regulatory framework for non-bank financial institutions (NBFIs), with each organisation operating under its own legislation and falling under different ministries and regulatory bodies.
“We must remember that the failure of any of these institutions would not only affect depositors, but also have implications for the Government and the country,” he said while debating the RCI report on TH in the Dewan Rakyat on Tuesday.
Radzi also highlighted the financial burden placed on the Government following TH’s previous difficulties, saying the Government had to assume RM27.8 billion in sukuk to help rescue the institution.
Given that a significant portion of these institutions’ investments are made domestically, he warned that the collapse of any one of them could have wider repercussions for the national economy.
He said the RCI’s recommendation for TH’s fund management to be placed under the supervision of the Securities Commission Malaysia (SC) was insufficient and called for a broader regulatory approach.
“What happens if LTAT or KWAP, for example, faces problems in the future? Are we going to establish another RCI?” he asked.
Radzi suggested that the Government consider Australia’s Australian Prudential Regulation Authority (APRA) as a model for overseeing institutions of this nature.
He also referred to former Bank Negara Malaysia governor Tan Sri Muhammad Ibrahim’s suggestion for the establishment of a “super-regulatory body” to oversee such institutions.
“I propose that the Government sit down with Tan Sri Muhammad Ibrahim and regulatory experts to discuss this matter.
“Let us use this opportunity to restructure the regulatory framework comprehensively,” he said.
