Malaysia set to curb loans growth<\/p>\n
KUALA LUMPUR (AFP): Malaysia's central bank is expected to
\ncall for curbs on lending in its upcoming annual report and
\noutline broad-based strategies to expand the banking system,
\neconomists say.<\/p>\n
Bank Negara's 1996 report will review the past year in detail
\nand outline the prospects of one of the world's most dynamic
\neconomies following its successful soft landing from breakneck
\ngrowth rates in recent years.<\/p>\n
Finance Minister Anwar Ibrahim last month said that the
\ncountry's 1996 gross domestic product (GDP) growth slowed down to
\na more manageable 8.2 percent after a dizzying 9.5 percent
\nexpansion a year earlier.<\/p>\n
Anwar, who is also deputy premier, said the country's current
\naccount deficit last year narrowed to about 11.2 billion ringgit
\n(US$4.5 billion) from a high 17.8 billion ringgit in 1995.<\/p>\n
Last year's GDP growth had been accurately predicted by Bank
\nNegara in its 1995 annual report, but it did not anticipate the
\nsharp fall in the 1996 current-account deficit, which has been
\ncredited to a surge in exports.<\/p>\n
Gan Kim Khoon, research manager at SocGen Crosby, said Bank
\nNegara was expected to forecast 1997 GDP growth of between 8.0
\nand 8.2 percent and a current-account deficit of 11 billion
\nringgit to 15 billion ringgit.<\/p>\n
\"There is basically nothing much to expect in terms of major
\neconomic policy as Bank Negara is not known to use the report as
\na tool to announce specific monetary measures,\" Gan told AFP.<\/p>\n
But C.S. Lum, an economist at Phileo-Allied Securities, said
\nthat among the priorities of Bank Negara would be finding
\nmeasures to ease the strong loans growth, which surged 28.8
\npercent in January and compared to deposits growth of 26.3
\npercent.<\/p>\n
\"Loan growth especially to the property sector and the
\nfinance, insurance and business services were high and we can
\nexpect Bank Negara to set some guidelines for these two
\nindustries,\" Lum said.<\/p>\n
Neighboring Thailand is currently reeling from a financial
\ncrisis stemming from excessive lending by banks to a glut-hit
\nproperty sector.<\/p>\n
Other analysts see a possible easing of Malaysian monetary
\ncontrols in the second half of this year following the economy's
\nsuccessful soft landing.<\/p>\n
In other areas of the financial system, banking sources said
\nBank Negara was trying to put a figure on the amount repatriated
\nby an estimated two million foreign workers in the labor-starved
\ncountry of 20 million people.<\/p>\n
Such remittances were in the past lumped under the \"errors and
\nemissions\" item but would now be classified under \"transfers
\n(net)\" in the balance of payment account, they said.<\/p>\n
\"The government realizes that foreign workers are vital to the
\ncountry's economic development and they have every right to remit
\ntheir incomes. The idea is to be transparent in our national
\naccounts,\" said an analyst.<\/p>\n
\"If so, this would paint a more accurate picture of the
\ncountry's payment balance account although the current account
\ndeficit may be slightly higher,\" said Phileo's Lum.<\/p>\n
Lum also expects Bank Negara to announce broad-based
\nstrategies to encourage banks to undertake a \"universal banking
\nsystem\" that would see them carry out different financial
\nactivities under one roof.<\/p>",
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