KUALA LUMPUR (July 4): Human Resource Development Corp (HRD Corp) has acknowledged the shortcomings highlighted in the Auditor-General's (AG) and Public Accounts Committee (PAC) reports released on Thursday, and maintained that levies collected from employers should only be used to train their own employees.

Following an audit process for the 2019-2023 period, it has made improvements in response to its findings.

However, HRD Corp did not clarify whether it had utilised the collected levies from employers for investment purposes, as alleged by the PAC.

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HRD Corp also said it has undergone reforms this year - under the directive of the Minister of Human Resources - to improve its corporate governance, which include the introduction of a strategic initiative account, which is separate from the levy trustee account, intended to ensure better transparency and efficiency in managing its finances.

"HRD Corp emphasises that the levies collected from employers should be used to train their own employees. However, the move to separate the accounts further fortifies the process to ensure that levies collected from employers will be used solely for the purpose of training registered employees," its chairman Datuk Abu Huraira Abu Yazid said in a statement on Thursday following the revelation by the AG and PAC earlier.

"The strategic initiative account is funded by HRD Corp’s accumulated profits (not using levy funds) to support upskilling programmes and human capital development for small and medium enterprises (SMEs), micro-SMEs and underserved communities," he added.

Earlier, the PAC, through its proceedings that started in Nov 2, 2023, revealed that HRD Corp has been utilising a significant portion of the levy it collected from companies for risky investments.

The investments were high-risk in nature, such as investments in put and call options, which may expose HRD Corp to the risk of significant losses, said Datuk Mas Ermieyati Samsudin, chairperson of the bipartisan parliamentary committee. HRD Corp is a company limited by guarantee under the purview of the Ministry of Human Resources.

This was done, according to Mas Ermieyati, by transferring the collected levies that have not been utilised by the employer within two years, to another account categorised as "unutilised levy".

In addition, the PAC also found weaknesses in the management of HRD Corp, including poor governance and dubious property deals, which may cause losses to the company.

In response, Abu Huraira said it has tightened its internal process in securing the approval of an investment panel which consists of members of the board "with experience in investment".

"This also includes emboldening the treasury division of HRD Corp, which is in charge of carrying out due diligence for every investment decision," he added.

Furthermore, Abu Huraira said HRD Corp has been simplifying and encouraging more levy utilisation by employers through new initiatives. For instance, the chairman said the levy can now be utilised for obtaining training services from international training providers such as Google, LinkedIn, Microsoft, Udemy, Alibaba and more.  

"In addition, 50% of the levy balance can be used to upgrade in-house training facilities and to pay internship allowances," he said.

"HRD Corp will ensure that continuous improvements are made to ensure good corporate governance. This is so that the mandate accorded to the agency to develop the nation’s human capital development can be carried out effectively," Abu Huraira added.

HRD Corp reported that its levy collection has increased from RM475 million in 2020, to RM848 million in 2021, RM1.81 billion in 2022 and RM2.13 billion in 2023.

The utilisation rate of the levy also recorded an increase from 63% in 2020 to 71% in 2023, according to HRD Corp. 

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