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This is a list on the statements/speeches by Malaysian Parliamentary
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Media Statement by Parliamentary Opposition Leader, DAP Secretary-General
and MP for Tanjong, Lim Kit Siang, in Petaling Jaya on Monday, 23rd August
1999:

Bank Negara should allay widespread concerns about ulterior agendas in the
forced bank mergers by explaining the rationale for the selection of
Multi-Purpose Bank as one of the six core banks
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Bank Negara should allay widespread concerns about ulterior agendas in the
forced bank mergers by explaining the rationale for the selection of
Multi-Purpose Bank as one of the six core banks.

Multi-Purpose Bank has had a chequered banking and political history. When
Lim Thian Kiat’s Multi-Purpose Holdings Bhd (MPHB) empire was dismantled
into three core entities and parcelled out to three separate parties in a
complex restructuring plan revealed at the end of June, MPHB’s 70 per cent
stake in Multi-Purpose Bank was sold to Malaysian Plantations Bhd.

The restructuring involved a new major shareholder in Malaysian Plantations
Bhd., a RM2 company Paradigm Capital Sdn. Bhd, which would buy over
Kamunting Corporation Bhd.’s 27 per cent stake in Malaysian Plantations and
the emergence Chan Chin Cheung as a new board member of Malaysian
Plantations Bhd.

Chan Chin Cheung is a director of Renong Bhd., a company associated with all
UMNO businesses and therefore a close friend of Daim Zainuddin.

This is why a foreign publication has said that Malaysian Plantations Bhd,
"until recently an obscure golf resort manager, is living proof that
political connections still rule the roost in Malaysia".

Bank Negara must explain the basis for the selection of Multi-Purpose Bank
as one of the six anchor banks, allowing it to swallow three bigger
institutions including the newly-merged RHB-Sime Bank, which is eight times
larger than Multi-Purpose Bank with RM7.2 billion in assets.

The Multi-Purpose Bank episode is the latest example highlighting what is
wrong with corporate governance in Malaysia, where corporate moves are
motivated by political expediency rather than shareholder interests.

This lack of transparency and corporate good governance is one reason why
there is increasing opposition to the Bank Negara’s forced bank merger proposal.

This is also why the four Opposition parties, namely DAP, KeADILan, PAS and
PRM have come out with a joint statement yesterday opposing the forced bank
merger plan with the following five reasons:

· While we recognise the need for banking system consolidation in the face
of imminent international financial liberalisation, we are opposed to the
means by which the authorities are approaching the problem. While market
forces alone cannot be relied upon to achieve and protect our national
interests, we favour market-based incentives to induce Malaysian banks to
serve the best interests of the nation, the public as well as balanced and
sustainable economic growth. For example, more attractive variations of the
incentive package in the earlier two-tier banking system can induce a
greater degree of desirable banking system consolidation. The government
should also work to ensure that the Malaysian financial system better serves
national economic priorities and the people’s financial needs rather than
simply adjust to globalised banking, whose shape is far from being inevitable.

· Reflecting its generally non-consultative and authoritarian approach to
the public policy matters, there has not been any convincing rationale for
the proposal, especially its specific features. The six bigger banks
envisaged have been seemingly arbitrarily dictated by the authorities with
little attempt to persuasively convince stakeholders of the scheme’s
superiority and real merits, besides allaying genuine concerns about its
deficiencies and adverse consequences. There is no evidence that the larger
banks will be better able to deal with the challenges ahead since not all
problems can be overcome with some economies of scale, especially since the
envisaged banks will still be puny by international standards.

· Considering some of the groupings and lead banks envisaged, at least some
of the forced mergers are likely to fail, thus worsening the Malaysian
financial system’s already weakened condition. There are many indications
of the likelihood of such failure, due to cultural, institutional and
personnel incompatibilities as well as the poorly conceived incentives
offered, which cannot motivate all the stakeholders concerned to ensure
successful mergers. Furthermore, before and during the recent banking
crisis, most of the smaller banks fared relatively better than the larger
banks. In the wake of the likely problems, foreign banks will probably
become more dominant in the Malaysian banking sector as they are best placed
to take advantage of the likely uncertainties due to the adverse
consequences of the ill-conceived bank merger proposal.

· Instead of the dictated mergers to be agreed upon in such a rush, we
favour the development of a multi-tier banking system, in which different
size banks would co-exist and complement one another. There is considerable
evidence that many smaller local or regional banks continue to serve their
clients and the economy more effectively than impersonal larger banks. The
many successful multi-tier national banking systems in other countries give
us confidence of the viability of such systems.

· We do not propose the replication of any particular foreign system, but
instead favour the voluntary evolution of such a system in this country,
considering the history and recent strengths and weaknesses of Malaysian
banking. Owners and managers of banks are not unaware of the major
challenges looming ahead, and recognise the need to change with the times
and new circumstances. But the forced nature, timing, tight schedule and
insensitivity of the merger proposal does not inspire confidence that the
authorities have a superior understanding of the problems, options and
solutions. The authorities’ various recent failures have only further
undermined public confidence in their ability to address the challenges
faced by the banking system in particular and the economy more generally.
Hence, there is widespread suspicion and rejection of the proposal, not only
for the features of the scheme envisioned, but also for its accelerated
schedule and coercive nature.

- Lim Kit Siang -
 

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