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Please Announce The Truth About The RM20 Billion Bonds For The Recapitalisation Of Malaysian Banks Statement by Dr Tan Seng Giaw, DAP National Vice-Chairman and MP for Kepong on the praises by the Bank for International Settlements, BIS, for bank reforms in Malaysia and Korea on 5 June 2000. 7.6.2000 | |||||||
| Nearly three years after the economic crisis, the Government claims that there is economic recovery. Certainly, in some sectors such as manufacturing for export, there are signs of improvement. Other sectors like retailing have yet to see better times. The Government should help these sectors instead of just crowing about the export of electronics. According to Bank Negara, the Central Bank, the year 1999 was clearly a year of recovery and consolidation for the banking system such as the the preliminary unaudited pre-tax profit in the sector of RM5.7 billion compared to RM5.3 billion in 1998. Malaysians would like to see the banks recover. The Bank for International Settlements, BIS, based in Switzerland, says in its annual report, that there is faster bank reforms in South Korea and Malaysia than other Asian economies. The government is said to play an aggressive part. Apparently, bank reforms are affected by the cost of recapitalisation: the cost in Indonesia is 50% to 60% of gross domestic product, compared with 40% in Thailand, 15% in South Korea and 12% in Malaysia. The Malaysian Government has estimated the non-performing loans, NPLs, in the banking system at around RM74 billion in 1998 and RM100 billon in 1999. At the end of 1999, Danaharta Nasional Berhad, set up to handle the NPLs, acquired NPLs with loan rights amounting to RM45.5 billion from the financial system, of which RM35.7 billion was the loan rights acquired from the banking system. There is a lack of transparency in the acquisition and management of the NPLs. Bank Negara only states that as at 31 December 1999, a total of RM17.6 | |
billion of the loans and assets under Danaharta's management has been restructured or disposed, with an average recovery rate of 80.2%. Danaharta has also conducted two successful restricted open tenders to dispose of foreign currency loans and papers in August 1999 and December 1999 involving 43 accounts worth US$394.25 million. Some believe that these tenders are shrouded in mystery. The National Economic Recovey Plan formulated an agenda for action in August 1998. It aims to preserve the integrity of the banking system by closer surveillance of banks and the improvement of NPLs, encouraging bank mergers, and addressing worsening collateral and non-performing assets. It sets up the asset management company such as Danamodal Nasional Berhad to inject funds into the banks. Where does Danamodal get the funds to recpitalise weak banking institutions, minimise capital erosion and financial cost to the Government? The Government issues RM20 billion worth of long-term bonds. The public are puzzled by the lack of openness in the issuance of these bonds. How far is the Government successful in selling them overseas? Hearing praises from BIS about bank reforms and self-adulation by the Government is one thing. Getting to the truth is another. We would certainly like to see transparency and openness in the management of Danaharta and Danamodal. We do not want these companies protecting a selected few only. Let us do away with irregularities such as cronyism and nepotism.
Dr Tan Seng Giaw | |||||
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