Call on Cabinet to take a policy decision on Wednesday directing Bank Negara to make public the outstanding sums and full list of persons whose non-performing loans have caused a financial crisis for Sime Bank, Bank Bumiputra, Abrar Finance and Cempaka Finance as well as for the country


Media Statement
by Lim Kit Siang  

(Petaling Jaya, Monday): I call on Cabinet to take a policy decision on Wednesday directing Bank Negara to make public the outstanding sums and full list of persons whose non-performing loans have caused a financial crisis for Sime Bank, Bank Bumiputra, Abrar Finance and Cempaka Finance as well as for the country.

The time has come for far-reaching reforms of the banking and financial sector in Malaysia to make it a model of accountability and transparency so that it would not be so vulnerable to gross abuses of power as well as criminal breaches of trust, requiring repeated bail-outs at public expense.

The preparedness of the government and the regulatory authorities to establish accountability and transparency in the banking and financial sector would be an important test as to whether Malaysia can win the battle of confidence-restoration, put the economic and financial crisis behind us, and embark on the long and hard road towards economic turnaround and recovery.

The government should be aware that national and international investors are very sensitive about the soundness of the banking and financial sector, as illustrated by a recent foreign news agency report which said that "Mounting domestic debt problems and a fragile banking sector could soon see Malaysia back in the middle of the Asian financial storm".

A Reuters report two days ago which focussed on concerns of financial analysts on the "high domestic debt" said:

The latest issue of Asiaweek (20th March 1998) in its article on "Banks On The Brink" surveying the troubled banks in Asia said the following about Malaysian banks:

This generally pessimistic outlook is reflected by the statement by Moody’s Investors Service on Saturday when it placed the ratings of Sime Bank Bhd. and Bank Bumiputra Malaysia Bhd. (BBMB) under review for a possible downgrade.

The New York-based agency noted that the "operating environment has continued to deteriorate" from the time it lowered its ratings of four Malaysian banks in January and that the central bank’s recent disclosure of troubles at Sime Bank and BBMB confirmed its earlier concerns over the vulnerability of Malaysian banks to asset quality and capital adequacy pressures.

In Moody’s opinion, "the disclosed scale of the problems though staggering still understates the true magnitude of the weakness in Malaysia’s financial system at a time when the sharply deteriorating asset quality threatens the solvency of many of the country’s weak financial institutions". Under these generally pessimistic outlook, the Cabinet should take the bold step on Wednesday to restore confidence by insisting on high standards of accountability and transparency in the banking and financial sector, starting with Bank Negara making public the outstanding sums and full list of persons whose non-performing loans have caused a financial crisis for Sime Bank, Bank Bumiputra, Abrar Finance and Cempaka Finance as well as for the country.

 (16/3/98)


*Lim Kit Siang - Malaysian Parliamentary Opposition Leader, Democratic Action Party Secretary-General & Member of Parliament for Tanjong