Banks told to reinstate credit lines
Banks told to reinstate credit lines
CHIANGMAI, Thailand (Reuters): More than 100 Southeast Asian
bankers called on banks in ASEAN on Saturday to reinstate or
establish new credit lines to promote trade in the region.
Ending a three-day conference, they also urged governments to
launch export financing schemes to help the export sector and
said the ASEAN Bankers Association (ABA) would look into
establishing an ASEAN bankers' acceptance market.
Banthoon Lamsam, chairman of the ABA, told a news conference
that he was heartened by early signs that the bottom of the Asian
financial crisis could be near for some countries.
"Good signs have emerged that measures for tackling problems
are clearer and the bottom of the crisis may be approaching for
some countries to boost chances of their recovery in the near
future," he said, adding that many nations regarded Thailand as
enjoying a good chance of early recovery.
The Thai baht has stabilized at under 38 to the dollar in the
past two weeks compared with its post-devaluation low of 56 in
January.
Thai interest rates have dropped sharply in the past two
months, raising hopes that battered banks would be more willing
to provide fresh loans to the corporate sector.
Banks in Indonesia, Thailand and Malaysia are reeling under
massive non-performing loans (NPLs) brought about largely by
plunging values of their currencies.
Banks in Indonesia carry NPLs amounting to 30 to 75 percent of
total lending. The figure stands at about 40 percent in Thailand
and 15 percent in Malaysia.
The Association of South East Asian Nations groups Thailand
with Indonesia, Malaysia, Singapore, the Philippines, Vietnam,
Brunei, Myanmar and Laos.
Market analysts said the NPLs would likely peak in early 1999
despite rallies of regional currencies against the dollar in the
past few weeks in line with an appreciating yen.
Ignatius Supomo, general manager of Indonesia's Bank Dagang
Negara, said that due to the current turmoil, ASEAN governments
should follow Australia, Japan and the United States in
guaranteeing letters of credit issued by their commercial banks.
Ng Kee Choe, chairman of the Association of Banks in
Singapore, told reporters the meeting discussed the merits and
demerits of Malaysia's recently imposed currency controls.
"The delegates conclude that while there are merits of
imposing currency controls if the situation demands...it is very
important that it be made clear that they are temporary and
should be removed when conditions permit," he said.
Malaysia pegged the ringgit currency at 3.80 per U.S. dollar
and ended the convertibility of the ringgit overseas as part of
the sweeping currency controls imposed on Sept. 1.
The ABA statement said delegates suggested a form of temporary
capital controls might be needed but ASEAN governments should
make it clear right from the beginning that whatever restrictions
they placed on capital mobility would be temporary.
It said ASEAN members appreciated assistance from the
International Monetary Fund, but the agency's policy
prescriptions sometimes lacked flexibility.
ABA secretary-general Tay Kah Chye told the briefing:
"Delegates felt that IMF could be more flexible and respond
faster to changing conditions, to adjust fiscal positions as
environment changes."
Chye said, however, that IMF reform programs for Thailand and
Indonesia had begun showing positive results.