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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Worswick who wrote (6325)	9/10/1998 9:20:00 PM
From: Stitch	Read Replies (2) \| Respond to of 9980

Clark, I am doing OK in spite of a cold and a backache picked up in Manila last week. Hope I am in better shape for the next three weeks of travel that will take me on a circumlocution of the globe. This from WSJ proving that Mahatir, who loves to spout off about the west's intentions of recolonizing his patch will do biz with the devil himself when he needs cash: Best, Stitch Reprinted for Personal Use Only: Dow Jones Newswires -- September 10, 1998 Malaysia/Mahathir/Salomon Smith Barney -2: Amount Not Known Dow Jones Newswires KUALA LUMPUR -- Malaysia's Prime Minister Mahathir Mohamad Thursday appointed U.S. investment bank Salomon Smith Barney, a unit of Traveler's Group Inc. (TRV), to find ways to raise funds for the country's troubled banking sector. "Salomon Smith Barney has been appointed as the financial adviser to Danamodal in the restructuring and recapitalization of the banking industry," Mahathir told reporters. "Salomon Smith Barney will advise the government in the implementation of a substantial financing program to meet Malaysia's objectives over the next two years." The amount of cash needed hasn't been decided, though. Malaysia has set up two new agencies - known locally as Dhanaharta and Danamodal - to buy up nonperforming loans and help recapitalize banks. But funding for this has been hard to come by after the country was forced to shelve a planned $2 billion sovereign issue. Mahathir blames international ratings agencies Moody's Investors Service and Standard & Poor's for that, after they slashed Malaysia's foreign exchange ratings to just above junk status. And Wednesday, Fitch IBCA took the plunge and wiped Malaysia off its investment grade lists, cutting the country to double-B from triple-B-minus following the sweeping capital controls announced last week. Those curbs prohibit the offshore trading of the Malaysian currency, and effectively pegged the ringgit (MYR) at MYR3.80 to the dollar. Meanwhile, Malaysia's banks need funds urgently. Wednesday, the central bank said a number of banks need urgent recapitalization, and MYR9.4 billion will be pumped into them over the next two to six weeks. MYR1.5 billion of that has already been pumped into the soon-to-be-merged RHB Bank Bhd. and Sime Bank Bhd. And Thursday, the central bank said it was forcing commercial banks to extend new loans at a rate of at least 8% each year to try and get the depressed economy growing again. Pressed on whether the banks would be able to do that, Mahathir said, "There's sufficient money in the banking system." He pointed out that Bank Negara had been urging banks to maintain lending growth at 15% annually, but many have only been extending fresh credit at a rate of 3%. "If banks don't lend, they're not doing their duty as bankers," Mahathir said. The premier also said the escalating stand-off with his former deputy, Anwar Ibrahim, won't hurt Malaysia's fund-raising efforts. "I don't think it will hurt the market's perception," Mahathir said. Anwar was dramatically fired as finance minister and deputy premier last week amid a flurry of allegations ranging from sodomy to treason. He vigorously denies those accusations, saying they are part of a high-level conspiracy to kill off any challenge to Mahathir's leadership. Over the past week, Anwar has been bunkered at his Kuala Lumpur house, urging sweeping political reform to the thousands of supporters and onlookers who turn out nightly. But Mahathir says Anwar is merely trying to make himself a martyr. "He's courting arrest," he said. "If he believes in the courts, he should have gone to the courts earlier."