Malaysia freezes yen loans: report

Malaysia freezes yen loans: report

KUALA LUMPUR (AFP): Malaysia has no immediate plans to borrow
money from Japan as the soaring yen was seriously affecting its
economy, a local financial daily here reported yesterday.

"One-third of the total federal government debt is in yen and
we are at the mercy of the Japanese," the Business Times quoted
Mustapha Mohamed, Malaysia's deputy finance minister, as saying.
Kuala Lumpur had to pay 500 million ringgit (US$200 million)
annually to service its yen loans despite reducing its Japanese
borrowings by 4.6 percent to 648.3 billion yen ($66.6 billion) in
the first three months of this year, Mustapha said.

He said the government had no intention of undertaking more
yen-denominated loans "as for now" and also discouraged private
sector borrowing from Japan.

Malaysia's yen-denominated loans made up seven billion ringgit
or 35 percent of its total debt for last year compared with six
billion ringgit or 28.7 percent of the debt value in 1992.

Economists blamed the growing debt partly on Malaysia's heavy
reliance on Japanese technology and heavy equipment to propel
industrial progress.

Mustapha said Malaysia's national Proton car -- manufactured
under a joint-venture with Japan's Mitsubishi group -- was a
"classic example" of the impact of the sharp appreciation of the
yen.

Proton prices started at 17,000 ringgit after its launch in
1985 but have risen steadily to a minimum of 31,000 ringgit now.
Mustapha said although a silver lining was expected in the surge
of yen through more Japanese companies seeking cheaper production
bases in Southeast Asia, Malaysia still had to compete for such
investments.