[ Laman Ehwal Semasa ReformIS ]
Date: 29 Aug 1999
Time: 23:09:47
Remote User: -
Subject: The Megabanks Threaten Chinese Support For the National Front From: "M.G.G. Pillai" <pillai@mgg.pc.my> Date: 1999/08/28 The creation of the six megabanks, allegedly to prepare for globalised competition but in reality to push its inherent problems under the political carpet, threatens to backfire. The official rationale, which on paper looks sensible, well-thought out, realistic, is neutralised when one man -- the finance minister, Tun Daim Zainuddin, or his cronies -- get to control most of the six; besides, the Chinese community all but loses control of the banking system. The Chinese community, not known for their prudence when it comes to running banks, nevertheless is livid that although on paper it controls three of the six banks -- the Southern/BHL Group, the Public Bank Group, the MultiPurpose Bank Group -- the convulsions within these groups, and in other smaller Chinese banks absorbed in the other three groups, creates waves within it that ensure an unexpected electoral backlash. The banner headlines which greeted the megabanks is tempered now with the overriding fears of having badly handled ot. Not just the unexpected Chinese reaction, but whether such shotgun marriages in a field where corporate and practical synergies are so disparate and important that they could scuttle it.
The overriding pressure for the megabanks came with the huge debts and non-performing loans Malaysian banking system built up, when loans were not on the project's viability but the project owner's connexions to senior figures in the government and favoured corporate godfathers. The government aggravated it by demanding that the normal caution in bank lending be thrown to the winds. The creation of Danamodal and Danaharta to reduce the worst effects of the looming banking bankruptcies could but nibble at the problem, both entities without the financial wherewithal to take over bank debts in this crazy scheme to make the bankrupt banks viable enough to start the merry-go-round of corporate lending once gain. Economic rules are stood on its head. But this move also provided a political opportunity to reduce the Chinese community's control of banks. The government presumed its support within the community is so strong thta it could get away with it. The recent announcement, by the Penghulu Tikus Rasputin himself, of a virtual re-think, for the moment, of the megabanks proposal, is yet another attempt to bolt the stable doors after the horses had bolted. When I asked a senior UMNO figure with excellent links to Seri Perdana (or whereever He Who Thinks He Is Lord Of All He Surveys decides to be at the time!) about this, he not only confirmed it, but also that the September polls date must be discounted because of this. With the Chinese community frustrations given fresh impetus with the release of the DAP leader, Mr Lim Guan Eng, from prison, it must be more so.
But more than Chinese unhappiness, the megabanks have an unaddressed fatal flaw. The Malaysian banking system was re-organised -- rationalised was the word used then, as I recall -- after the 1986/87 economic problems, without addressing the underlying problems which necessitated the re-organisation, and ensured this, helped by this inherent, arrogant belief in an ill-thought out and untested economic plan would work. The mistakes swept under the carpet then comes to throw into dissarray any gains that reorganisation would have ensured. The answer to the current problems, therefore, is the megabanks. But the banking system is in shellshock, economically, culturally, financially. The government rushed through the megamergers, putting a deadline of less than a year, with its plans, when announced, were usually written in hieroglyphics that it could be deciphered only by political priests like the Penghulu. The Chinese community's now less-than-fulsome support for it, the government must prepare now for the economic and political impact of the megabanks in another six or seven years unless it wants to join the Fourth World. That stark reality stares at Malaysians, intensifies amidst the continuing saga of
He Who Must Be Destroyed At All Cost. So, bye-bye September! Now, it is three months hence or in June next year! That option is no longer with the Prime Minister. Or UMNO. Or the National Front. All because some one thought it a brilliant idea to merge the banks into six megabanks.
M.G.G. Pillai pillai@mgg.pc.my
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