[ Laman Ehwal Semasa ReformIS ]
Date: 05 Aug 1999
Time: 21:23:06
Remote User: -
Mahathir's upturn runs out of puff By Tony Boyd, Global Markets Editor The good news economic recovery story that was expected to underpin the re-election campaign for Malaysian Prime Minister Dr Mahathir Mohamad is starting to lose its lustre.
Malaysia's benchmark stock index has fallen 15 per cent in the past month, making it the second worst performing market in Asia after Taiwan over that period.
Dr Mahathir has blamed the fall in the stockmarket on the failure of domestic stockbrokers to move quickly to expand their margin lending accounts.
And yesterday he called on bureaucrats to step up their capital expenditure programs in a bid to boost the economy, which is expected to post 2 per cent growth this year.
The fragility of Malaysia's economic recovery showed through in figures released this week by HSBC Holdings plc, which owns the largest foreign bank in Malaysia.
HSBC said Malaysia accounted for about half the $US423 million ($650 million) net charge for bad and doubtful debts in its Asia-Pacific operations outside Hong Kong.
This charge was more than double the corresponding charge in the first half of 1998 and slightly more than the charge made in the six months to December 1998.
A spokesman for HSBC said the bank had made "bad decisions" in Malaysia.
But he refused to comment on speculation that heads were about to roll in the bank's Malaysian management, which this week began the process of sacking a quarter of the 4,000 Malaysian staff at a cost of $US16 million.
HSBC's bad debt provisions in Malaysia relate to property, commercial and construction lending which totalled $US3.7 billion at June 30 this year, down from $US3.8 billion in June 1997.
The bank has $US950 million in non-performing loans in Malaysia, which indicates that at least a quarter of its total construction and commercial lending has turned bad.
Standard Chartered Bank, the second biggest foreign bank in Malaysia, ahead of Citigroup, said yesterday it had had to make fresh bad debt provisions in Malaysia in the six months to June of 163 million ringgit ($65 million), down from 190 million ringgit in the six months to December 1998 and 193 million in the six months to June last year.
But the bank said: "Malaysia, which at one stage was criticised for introducing exchange controls, also looks as though it may be poised to return to positive growth in 1999 with an acceleration in economic development expected in 2000."