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RM250bil liquidity in banking and capital marts, says Najib

By Monday March 23rd, 2009 No Comments

KUALA LUMPUR: The country has a huge liquidity of RM250bil in the banking and capital market which can be tapped into, said Deputy Prime Minister Datuk Seri Najib Tun Razak.

Najib, who is also Finance Minister, said the Government wanted banks to continue providing loans to businesses especially during these difficult financial times and would provide the institutions with incentives.

“In facing the economic crisis, we have to ensure that the financial system and banking sector can channel out loans and credit to businesses and entrepreneurs. As long as they cannot do that (ensure availability of credit), we will not be able to ensure the economy recovers,” he told reporters.

He was speaking at the opening of the MIDF (Malaysian Industrial Development Finance Berhad) Bumiputra Entrepreneur Symposium yesterday.

Najib cited the scheme for small-medium industries provided by the Credit Guarantee Corporation Berhad (CGC) under Bank Negara’s supervision, which will provide an 80% guarantee for loans.

“We want to give incentives to banks, so that they do actual lending to create a tipping point effect, by taking up 80% of the risks. Banks, like everyone else, are averse to risks and are cautious about non-performing loans.

“By mitigating the risks, the Government will bear contingent liability to provide incentives for banks to lend. Hopefully lending and the availability of credit will be at a level that will sustain the requirements for businesses to function,” he added.

Najib also said the Government would establish, within the next two months, a financial guarantee institution to widen the utilisation of the bond market.

The new institution would have a start-up capital of RM1bil and be separate from the CGC, but monitored by Bank Negara. Najib said that from the capital, an estimated RM15bil in bonds could be raised.

“This is credit from the bond market. We need this because there are some very good companies but they have AA or A-status. Only AAA”status companies have access to the bond market,” he said, adding that the initiative would be on a long-term basis, beyond the financial crisis.

Najib also offered advice to those venturing into business that they must start with an important basis of “know-how” and not “know-who.”

Those who want to enter business must also have the right attitude and readiness. They must also have good business strategies and be innovative instead of entering businesses that were already too saturated, he said, citing travel agencies as a field that was too saturated.

Source : The Star

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