An asset management company initiated by the government, called Valuecap Sdn Bhd, with RM10 billion funds began operation at the end of last week. It is owned equally by Khazanah Nasional Bhd (Khazanah), Permodalan Nasional Bhd (PNB) and Kumpulan Wang Amanah Pencen (KWAP). Valuecap will be investing in the KLSE.

The Employees Provident Fund (EPF), which has been wrongly reported as also being involved with Valuecap, has come out with a strong denial. It stresses that it only "invests in companies with sound fundamentals, long-term growth potential and good management", and will not participate in activities to shore up the market or to bail out ailing companies. EPF appears to be criticising Valuecap and regretting its past mistakes.

What is the real purpose of Valuecap, with such amount of funds? Is it trying to shore up the market in order to make profits for the three companies associated with it? Or is it trying to improve the share market condition during the short period before the coming general election?

We note that after Valuecap began operation, the Composite Index rose by 9.24 points (to 635.8) or 1.5 percent. On Monday afternoon, it rose by about 13 points. But how long can this rather artificial improvement be sustained? Billions have been injected into the KLSE in the past, but what have been the results in the long term?

Much has been fleeced from Khazanah, PNB and KWAP in the recent past to bail out a few large crony companies, the most well-known being Renong, without benefiting the common people at all.

Now, the people's funds will again be used or abused for the benefit of a few crony companies and a handful of major players in the share market. Can the condition of the country's economy and the life of the people be improved by squandering billions upon billions of public funds in the share market?

We know that billions of ringgit was burnt up in a futile attempt to check the effects of the financial crisis and to rescue the share market towards the close of the last millennium. About 10 years ago, the treasury lost RM15 billion following some foolish speculative activities related to the British sterling. It is well known that these activities were under the direct supervision of Nor Mohd Yakcop, now the special economic adviser to Prime Minister Dr Mahathir Mohamad. Apparently, he is primarily responsible for the idea of setting up Valuecap.

How much more of the nation's wealth and people's money must be squandered?

PRM strongly urges the Finance Ministry to give a complete and comprehensive explanation of the background and the true objective of setting up Valuecap. If it fails to do so, then we have no choice but to conclude that the short-term goal is actually to save certain companies and capitalists and also, perhaps more importantly, to raise funds needed by the Barisan Nasional for the coming general election.