ID :
119375
Fri, 04/30/2010 - 01:23
Auther :

MSIA'S COST OF RECOVERY FROM 97/98 ASIAN FINANCIAL CRISIS AMONG LOWEST GLOBALLY




KUALA LUMPUR, April 29 (Bernama) -- Malaysia's cost of recovering from the
crippling 1997/98 Asian financial crisis vis-a-vis other regional economies, was
among the lowest globally, compared with affected economies and despite not
going to the International Monetary Fund (IMF).

The net cost of recovery of the banking resolutions was 2.6 per cent of
Gross Domestic Product (GDP) while being one of the lowest in the world,
a great success story.

"For example, after 12 years, we managed to recover 65 per cent of the
financing to Danaharta and fully recovered the cost (of capital) to Danamodal,"
Governor of Bank Negara Malaysia (BNM) Dr Zeti Akhtar Aziz told reporters after
presenting the Kijang Emas scholarship award here Thursday.

Dr Zeti attributed the foresight on the part of the central bank in
resorting to early intervention, plus institutional arrangements put in place to
deal with the various problems, contributed to the lower cost in managing the
crisis.

She also said the cost of the crisis involved fiscal costs, cost to
shareholders, cost to labour dislocation following the loss in employment,
financing the acquisition of assets by asset management company Pengurusan
Danaharta Nasional Bhd (Malaysia's National Asset Management Company) as well as
the issuance of bonds by Danamodal Nasional, a special purpose vehicle, set up
to recapitalise ailing banks.

"Financing the cost of a financial crisis is high. You won't know until you
recover," she added.

She said the bank had made the assessment after 12 years, as the 10-year
bonds had matured and were redeemed recently.

Dr Zeti said the bank had handled the Asian crisis well, and even though it
had to close down some institutions, it was all done in an orderly manner.

"As such there is no loss of domestic confidence in the local financial
system," she explained.

As for the current financial problems affecting the global economy, she said
Bank Negara had prepared ahead, and was in a state of readiness for any
consequences.

For example, it had enhanced the corporate debt equity by setting up
Danajamin Nasional Bhd to ensure continued flow of credit in the financial
system, for businesses.

"However, very few have come forward to use this facility. So far, things
have been functioning well," she said, adding that the financial problems
affecting Greece and related countries in Europe, had not impacted much of
Asia.

-- BERNAMA


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