(AFP) - Malaysia's trade union movement said today it would go ahead with a protest against alleged misuse of the state retirement fund despite claims it would embarrass the country during an international meeting.

The picket by the Malaysian Trades Union Congress (MTUC) on May 12 has not been planned to coincide with a meeting of Southeast Asian labour ministers in Kuala Lumpur, MTUC secretary-general G Rajasekaran said.

Rajasekaran said the MTUC, representing some 550,000 workers, agreed on the picket on April 6.

They decided to delay it to give time for the Employees Provident Fund (EPF) or the government to settle differences, Bernama news agency quoted him as saying.

Image tarnished

Unions are angry at the fund's action in allegedly bailing out politically connected companies and at the six percent dividend paid to 9.7 million contributors last year, the lowest in 26 years.

They also object to the government decision to reduce workers' contributions from 11 to nine percent of salary for one year to boost domestic demand.

Human Resources Minister Fong Chan Onn said yesterday the protest would tarnish Malaysia's image as host of the meeting of labour ministers from the Association of Southeast Asian Nations.

Fong also said he had heard "rumours" that an opposition party was instigating the action. Prime Minister Mahathir Mohamad has urged unions to drop the action.

Industrial action and protests by unionised workers are fairly rare here.

Politically motivated

Rajasekaran said the MTUC would go ahead with the picket but only at the EPF headquarters and not nationwide.

"We don't want to open our doors to politics ... this was our decision and we will handle it very carefully," he added.

On Tuesday, Rajasekaran cited the EPF's purchase of shares in telecoms firm Time dotCom as politically motivated.

"To us, it's a clear rescue mission because Time dotCom was 75 percent undersubscribed ... the government is using the people's money for bad investment and if this goes on, losses for 2001 will be greater," he said.

Time dotCom is a unit of Time Engineering, which is 47 percent owned by the debt-laden but politically well-connected conglomerate Renong.