[ Laman Ehwal Semasa ReformIS ]
Date: 23 Aug 1999
Time: 02:06:04
Remote User: -
Alternative Parties Reject BN Government Bank Merger Proposal In a joint press conference yesterday, the Barisan Alternatif categorically rejected the Barisan Nasional (BN) Government's recent bank merger proposal, and will abandon the scheme if it secures a mandate from the Malaysian electorate in the forthcoming general elections. The BN government's scheme to forcibly merge the existing banks and financial institutions into six larger banks was characterised as irresponsible and ill-conceived. While recognising the need for banking system consolidation in the face of imminent financial liberalisation, the Barisan Alternatif is opposed to the means by which the authorities are approaching the problem. For market-based incentives "While market forces alone cannot be relied upon to achieve and protect our national interests, we favour market-based incentives to induce Malaysian banks to serve the best interests of the nation, the public as well as balanced and sustainable economic growth," said Dr Wan Azizah, speaking for the coalition. She said that government should also work to ensure that the Malaysian financial system better serves national economic priorities and the people's financial needs rather than simply adjust to globalised banking, whose shape is far from being inevitable. The Barisan Alternatif also rejected the non-consultative and authoritarian approach to public policy matters and noted that there has not been any convincing rationale for the BN government's specific proposals. "The six bigger banks envisaged have been seemingly arbitrarily dictated by the authorities with little attempt to persuasively convince stakeholders of the scheme's superiority and real merits, besides allaying genuine concerns about its deficiencies and adverse consequences," the statement noted. "There is no evidence that the larger banks will be better able to deal with the challenges ahead since not all problems can be overcome with some economies of scale, especially since the envisaged banks will still be puny by international standards." Dr Wan Azizah also stated that some of the groupings and lead banks envisaged suggested that at least some of the forced mergers are likely to fail, thus worsening the Malaysian financial system's already weakened condition. She pointed to the cultural, institutional and personnel incompatibilities as well as the poorly conceived incentives offered, which cannot motivate all the stakeholders concerned to ensure successful mergers. The coalition also noted that before and during the recent banking crisis, most of the smaller banks fared relatively better than the larger banks. In the wake of the likely problems, foreign banks will probably become more dominant in the Malaysian banking sector as they are best placed to take advantage of the likely uncertainties due to the adverse consequences of the ill-conceived bank merger proposal. A multi-tier system Outlining the Barisan Alternatif's approach, Dr Wan Azizah said, "Instead of the dictated mergers to be agreed upon in such a rush, we favour the development of a multi-tier banking system, in which different size banks would co-exist and complement one another." She noted that there is considerable evidence that many smaller local or regional banks continue to serve their clients and the economy more effectively than impersonal larger banks, and pointed to the many successful multi-tier national banking systems in other countries as evidence of the viability of such systems. As to how it could develop, the coalition favoured a "voluntary evolution of such a system in this country, considering the history and recent strengths and weaknesses of Malaysian banking." "We believe that a voluntary process is the best means to ensure that the interests of all stakeholders are adequately protected," added Dr Wan Azizah. "The merger proposal rides roughshod over the interests of the owners and managers of most banks, pays scant attention to the interests of minority shareholders, and is even less concerned for the interests of other stakeholders, especially clients, customers and employees." Financial sector employees have taken the brunt of the recent financial crisis and are likely to suffer further from massive lay-offs and reduced pay, the statement noted. The statement also pointed out that owners and managers of banks are aware of the major challenges looming ahead, and recognise the need to change. At the same time, the forced nature, timing, tight schedule and insensitivity of the merger proposal does not inspire confidence that the authorities have a superior understanding of the problems, options and solutions. Coupled with various recent failures, this has only further undermined public confidence in their ability to address the challenges faced by the banking system in particular and the economy more generally. "There is widespread suspicion and rejection of the proposal," the coalition noted. Politically motivated The Barisan Alternatif noted considerable public concern that the bank merger proposal is politically motivated, mainly to eliminate those not politically favoured by the clique currently in control, especially those believed to be associated with former Finance Minister Anwar Ibrahim. "The bank merger proposal seems likely to further concentrate ownership, control and influence in the banking sector at the expense of the public and Malaysian economic competitiveness," the coalition said. "In particular, there is considerable concern that the dominant clique is using the financial restructuring process, especially the bank merger proposal, to control the financial sector more thoroughly than before." In concluding, Dr Wan Azizah said that although the proposed bank merger is clearly motivated by the haste and greed of the politically dominant clique before an election which may undermine their political status, the Barisan Alternatif had no wish to politicise the issue. She called on the BN authorities to immediately abandon their ill-conceived proposal in favour of the superior and fairer approach outlined in the Barisan Alternatif's statement. The press conference was also attended by Dr Chandra Muzaffar for Parti KeADILan Nasional, Hj Subky Latif for PAS, Mr Lim Kit Siang for the DAP and Dr Syed Husin Ali for the Parti Rakyat Malaysia (PRM). ***** Free and fair elections? "As far as I am concerned, elections in Malaysia are 100% free.... However, I must admit that elections are only 50% fair. It is obvious that government machinery and resources are used by the ruling party in a subtle or roundabout way much to the disadvantage of the opposition parties" -- Datuk Abdul Rashid Abdul Rahman, former secretary of the Election Commission. The Star, 18 January 1998
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