Bankers urge quick use of Japanese aid

Bankers urge quick use of Japanese aid

CHIANG MAI, Thailand (Reuters): Private bankers in Southeast Asia on Thursday urged regional governments to tap quickly Japan's $30 billion aid plan and to promote sound economic policies to help weather the region's financial crisis.

"While we could choose to wait, a pro-active approach better serves our interests," said Banthoon Lamsam, chairman of the ASEAN Banking Council (ABC). "I urge ASEAN to formulate plans to expedite the disbursement of this fund."

"Quick action will lead to a quicker turnaround for the ASEAN economy," Banthoon told more than 100 bankers gathered in this northern Thai city for the 12th ABC conference.

The Association of South East Asian Nations or ASEAN groups Brunei, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

On October 3, Japanese Finance Minister Kiichi Miyazawa announced in Washington the so-called Miyazawa Initiative -- a $30-billion aid package to restore Asia's financial health.

The Philippine government said on Thursday it is hoping to tap $1.5 billion from the package.

Bank balance sheets in ASEAN have been ravaged by the regional crisis since July 1997, with Indonesia and Thai institutions sustaining huge losses that required massive government bail- outs.

Market analysts have estimated that non-performing loans (NPLs) of Indonesian banks stood between 30 and 75 percent of the total and the Thai central bank put NPLs at Thai institutions at more than 40 percent.

Ratings agency Standard & Poor's projected recently that Malaysian bank's NPLs may peak at 30 to 32 percent in 1999, up from about 15 percent in July. Malaysian authorities have given lower figures.

"The Asian financial turmoil has served as a major wakeup call for all of us to critically examine our banking and financial policies," said Ng Kee Choe, chairman of the Association of Banks in Singapore.

"It has underlined the need for governments to implement sound and credible macro-economic policies."

Ng said Singapore's four top banks carry a combined S$29.2 billion (US$18 billion) loan exposure in four ASEAN countries and South Korea, another country hard hit by financial crisis.

He said more than 60 percent of the exposure was in Malaysia and Indonesia.

"Although relatively unscathed, we are not unhurt, but fortunately we are not critically injured," he told the conference.

Ng said that despite the 16 months of turmoil in Asia, well- regulated and solidly capitalized Singapore banks managed to post profits in the first half of this year, although their earnings fell about 40 percent from a year-ago period.

Ignatius Supomo, general manger of Indonesia's Bank Dagang Negara, called for greater co-operation among ASEAN's private banks. "The problem faced by the banking industry is tremendous," he said.

Indonesian NPLs, aggravated by the plunge of the rupiah currency, surged 157 percent in local currency terms between the end of 1997 and the end of April this year, Supomo said.

Chulakorn Singhakowin, president of Thailand's Bank of Asia Plc, said the Thai government must prepare itself and the country to cope with more regional turbulence.

"We think the Thai authorities should start asking themselves 'what if those investors do not return?' and how the country would survive and find itself back to a recovery path."

However, the banker said he would not want Thailand to follow Malaysia by imposing tight capital controls.

Malaysia pegged the ringgit currency at 3.80 per U.S. dollar and ended the convertibility of the ringgit overseas as part of sweeping currency controls imposed on Sep. 1.