(Penang, Thursday): The announcement by the Deputy Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim, yesterday that a task force would be set up to be responsible to expedite the processing and approval of loans under its RM1 billion fund for small and medium-sized industries within to weeks is most welcome.
Anwar said the task force, which will be headed by a senior Bank Negara official and will be represented by officials from the Treasury, Entrepreneur Development Ministry, Ministry of International Trade and Industry and the private sector, would ensure that the loans, between RM500,000 and RM2 million, would be approved to eligible applicants within two weeks after the applications were received.
Anwar said that upon instruction from the task force, it is compulsory for the financial institutions to pay out to the borrower and financial institutions which refused to disburse the loans would be struck off the list of participating institutions which are Bank Pembangunan Malaysia Bhd., Bank Industri Malaysia Bhd., Bank Pertanian Malaysia Bhd., Malaysian Industrial Development Finance Bhd., Bank Bumiputra Bhd., Maybank Bhd., Bank of Commerce Bhd., RHB Bank Bhd., Sime Bank Bhd. And BSN Commercial Bank Bhd. Anwar's announcement of a task force to approve applications by SMIs for the RM1 billion fund within two weeks is most welcome and DAP calls for the expansion of the fund to RM3 billion as well as full transparency and removal of all forms of discrimination in its implementation
This is the first piece of good news for the SMIs in the bleak economic gloom surrounding the country and region, at a period of a very tight credit squeeze.
The Government should use the SMI fund as the first step to demonstrate its commitment to the principles of accountability, transparency and integrity and to drop old ways of operation which breed abuses, malpractices and even corruption, by:
It is only if these five suggestions are accepted and acted on by the government that the loan scheme could bring some cheer to the SMIs.
Otherwise, Christmas this year for Malaysians, though not yet a blue Christmas, is a fairly despondent one - with a slew of bad financial and economic news both in the country and throughout the region.
By the time Malaysians celebrate the double festivities of Qongxi Raya at the end of next month, the bite from the economic and financial crisis would have been more painful and sharper, bringing very little cheer to the dual events.
In Indonesia, the rupiah yesterday crashed past the sensitive 6,000-level against the US dollar as it dived to yet another record low amid fears Indonesia's debt position was worsening.
In Seoul, the International Monetary Fund had to strengthen its rescue package to South Korea and accelerate the timetable for the economic bailout to forestall a sovereign default - which did not come in time to save the plummeting stock market with the benchmark Korea Composite Index falling 14.91 points yesterday, or 4.1 per cent, closing at 351.45. Its currency, the won, rose slightly yesterday after hitting an all-time low of Won1,965 to the dollar on the previous day.
To prevent the calamity of a sovereign default, South Korea would now receive $10 billion from IMF and the Group of Seven most industrialised countries (G7) by early next year.
Of the total, $2 billion would come from the IMF on December 30, while the rest would be made available in early January. The IMF had originally planned to disperse the third tranche of about $2 billion to South Korea upon the successful completion of the country's review on January 8.
As part of the deal South Korea and the IMF agreed on a further liberalisation of the country's financial markets. Foreigners' stock holding limits of local companies would rise to 55 per cent from the current 50 per cent limit by December 30. By the end of 1998, the ceiling on foreigners' stock holdings would be scrapped.
The local bond market would be opened to foreigners at the end of December. Meanwhile, foreign banks and securities companies would be allowed to set up incorporated units in South Korea in March 1998.
Despite the IMF bail-out, the South Korean economy still could grind to a halt with a default on South Korea's government-backed debt. South Korea revealed on Tuesday that its foreign debt topped US$200 billion, double the amount previously admitted.
The lesson the Malaysian government must learn from the South Korean calamity is that no government should trifle with the confidence of the people, especially when the country is in the midst of a roiling prolonged economic crisis.
For this reason, I would urge the government to examine every action, measure and even speech and statement from the standpoint as to whether it would enhance confidence and to forbear from taking any measure or making any statement which would undermine confidence, as confidence-building must be regarded as the top-most agenda of the government and the acid test of the competence and capability of the Cabinet in a country trying to resolve an economic crisis and effect an economic turnaround in the shortest time possible.