Banks tighten lending rules amid uncertainty

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By DANIEL KHOO danielkhoo@thestar.com.my

KUALA LUMPUR: The competitive environment for loans by banks will likely abate in the months ahead despite a general slowdown of loan growth which is expected this year, analysts said.

This is because banks in Malaysia are also expected to put their own interest first and extend loans to the consumer sector more cautiously given the uncertain backdrop amid the economic turmoil in the US and eurozone.

“It is quite normal to be more cautious as dark clouds gather over the horizon. However, I don't expect the slowdown to be as bad as it was back in 2009 when the sub-prime crisis hit the US,” said a banking analyst from one of Malaysia's top three banks by market capitalisation.



“Given the state of the global economy, it is timely that Bank Negara imposes stricter rules on lending to continue to keep lending activities in the country at a healthy state. A healthy banking system will only ensure a healthy economy,” the analyst added.

Bank Negara's more stringent revised lending rules came into effect on Jan 1.

Show-and-tell: Data released by Bank Negara showed that loan growth in November 2011 moderated further to 12.8% from a 13.1% and 13.8% growth in October and September 2011 respectively >>

Effective this year, the debt service ratio of a loan applicant is calculated based on the person's net income rather than gross income, which means the calculated income of the applicant is based on his or her take home salary after tax deduction and Employees Provident Fund contribution.

The softening competition for loans also means that loan growth is likely to slow further from the preceding two months.

Data released by Bank Negara showed that loan growth in Nov 2011 moderated further to 12.8% year on year (yoy) from a 13.1% and 13.8% yoy growth in October and September 2011 respectively.

CIMB Investment Bank's analyst Winson Ng had in a report on the sector outlook said that there was still a downside to the industry's loan growth even though it had declined for the two months.

“We are projecting total loans growth of 12-13% for 2011, followed by a softening to 9-10% in 2012 when consumer loans are expected to increase 10-11% and business loans are expected to advance by 8%-9%,” Ng said in his report.

Despite the apparent slowdown in loan growth, Maybank Investment Bank said that the scenario might not be as bad as it seems because there was a pick-up in loan applications and approvals, with a slight improvement in spreads in November 2011.

Maybank analyst Desmond Ch'ng said that the total system loan growth in 2012 was expected to slow further to 9.4% while loan growth was expected to be at 12.4% in 2011.

Meanwhile, RHB Investment Bank said in a report that Bank Negara could resort to cutting interest rates should global economic conditions deteriorate further and that it expected Bank Negara to employ a more proactive approach to “begin cutting interest rates sooner rather than later.”

RHB said that based on its sensitivity analysis, the Alliance Financial Group Bhd and Malayan Banking Bhd would be more adversely impacted by a cut in interest rates due to their higher proportion of variable-rate loans.

No fresh start to 2012

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MUSINGS By MARINA MAHATHIR

The last year was one where there were particularly high levels of obliviousness. Why not, in 2012, for the sake of doing something different, have a campaign called “End Stupid Statements”.

IT’S 2012 and if the Mayans are to be believed, the world ends this year. For me, the world didn’t start well because we got up on New Year’s Day to dry pipes. No water in the toilets is not what you call a fresh start to the year.

Could someone make a resolution to replace the old pipes in Bangsar, please?

Otherwise, we Bangsarites will go on a shower strike and stink the place out until our demands are met.
And, yes, our smelly mob will assemble in the streets to protest.

For some other Malaysians, especially some students, the New Year certainly did not start well at all. It makes one sigh again with frustration.

Let us see this clearly; the only people capable of using force on others are the ones with the batons and guns.

Generally, those aren’t civilians, and especially not students.

If this is the way the year is going to start, then we have learnt nothing from 2011, nor will we do anything new in 2012.

We will continue to exhibit our fears by clamping down on those who think differently, or who are simply different.

We display our paranoia by immediately looking for who is behind those who think differently.

We cannot imagine that people can think for themselves, without someone telling them how and what to think and do.

It’s the ultimate indictment of our education system, that every single thing anyone does, especially if contrary to what the establishment wants, must be attributed to a sheeplike disposition to be led.

Well, surely, if those who are contrarian are doing it because they are sheep, then those who are conformists are also sheep.



After all, everyone went through the same school system, no?

The last year, for me, was one where there were particularly high levels of obliviousness among those who rule us.

Oblivious to what people really think and want being chief among them.

Whether it’s deliberate or not, I can’t tell, but somehow there’s mild comfort in believing that it’s just natural gormlessness, and not willful blindness.

I am hoping that this year will be a year of greater imagination.

It would be nice if our leaders suddenly had the imagination to trust their people to be able to think on their own.

And to trust that people thinking on their own is not necessarily a bad thing, nor necessarily a move that will backfire.

I’d also like our leaders to start believing that their people are generally good people, who get on with one another and simply want to live their lives as best as they can.

And they can do all that without any interference from those who think they are leading us.

I don’t need anyone to tell me how to get on with my neighbours; I already do.

I do need someone to tell off those people who keep telling me to constantly be suspicious of my neighbours, including when they are nice to me.

Apparently this is only because they want to dislodge me from my faith.

In that case, my being nice to them must be equally effective at dislodging them from their beliefs.

Why not then have “Be Nice to Your Neighbours” campaigns?

Indeed, why not in 2012, for the sake of doing something different, have a campaign called “End Stupid Statements”.

Every statement uttered by a public figure that simply does not stand up to scrutiny gets printed on a big banner and then symbolically thrown into a giant dustbin at Dataran Merdeka.

My first candidate: Jews and Christians Are Taking Over the Country! (My test for the credibility of that statement is to ask: what for?).

I’m sure it’ll be a full dustbin. But what am I saying?

We have an election to look forward to, which means there’ll be an endless supply of dumb utterances from all sides of the fence.

We should arm ourselves with deflectors to shield us from the inanities that are bound to rain upon our poor heads.

Or helmets at the very least, because it’s bound to injure our craniums. But let me remain optimistic.

The first person that says all Malaysians are equal under our Constitution gets my vote.

Or who says, men and women are equal, or who outlaws child marriage.

And I’ll even give some grudging respect to the first person who says: “I lied, I’m sorry, I’ll step down now.”

But I suppose that would be like expecting to see porcine flying objects. Life trundles on, folks.

Try and have a good year!

Malay psyches: race & social class in politics

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 Malay social class comes into play

CERITALAH By KARIM RASLAN

While race remains an issue in the Malaysian political discourse, the matter of social class is now becoming a key determining factor.

FOR the last 50 years, Malaysian politics has been defined by race. From the Malayan Union controversy of 1946 to the riots of 1969, Malay fears over non-Malay economic might have been at the heart of the Alliance’s (and later Barisan Nasional’s) electoral calculations.

But times have changed and while race continues to simmer, a new long-forgotten issue – social class – is fast becoming a key determining factor.

Moreover, the public is increasingly sceptical of those who promote Malay rights. They view such figures in much the same way as small-town Midwesterners look on the antics of K-Street lobbyists in Washington; and just as with Americans, there is mounting outrage with every successive incidence of establishment corruption and abuse of power.

In this respect, Malaysia is merely following global trends as demonstrators across the world – from New York and Madrid to Cairo and Damascus – take to the streets to express their frustration and alienation with prevailing economic policies.

Still, it’s critical that we understand how and why this has happened because the forces at work are not one-off or temporary.

Instead, they are irreversible and overwhelming.

Technology is the key catalyst. By observing how the media has been buffeted by these changes, we can begin to learn in turn how “race” has slipped from the forefront of Malaysian political discourse.

So, let’s return to the years immediately after the 1969 riots. At that stage, news distribution was a highly-centralised business. The industry was top-down, capital-intensive and easily subject to political controls.

Printing presses, TV and radio stations were located in specific places and the channels linking them to audiences were similarly defined and determined.



This, along with a vast expansion of the government apparatus (from operational ministries to agencies and state-owned enterprises) allowed ideologues to set in motion a series of policies intended to unify and homogenise the Malay community.

In the process, a once-diverse and disparate Malay/Muslim world — don’t forget the Malays were a predominantly maritime and littoral people – was forcibly melded into one, with the aristocratic “bangsawan” ethos of Umno at its core.

Muslims of Indian, Javanese, Acehnese and Hadramauti origin were encouraged to do away with their specific cultural practices as Malay-ness, as defined by Kuala Lumpur-based ideologues, became paramount.

Geographical differences were likewise ironed out in order to present a united voice as Kedahans, Johoreans and Terengganu-ites became Malay first. In this push, however, the biggest losers were Malays from the two most developed states – Perak and Selangor – where a sense of local identity was totally eradicated.

The media was complicit in this agenda, strengthening the centre as a sense of local sentiment was denigrated as backward.

Of course, in East Malaysia, the process was all the more intense as pressure was brought to bear on Bajau, Orang Sungai and Melanau communities to become explicitly Malay – thus denying their distinctive local identities.

Similarly, the left-of-centre, socialist traditions exemplified by the late Burhanuddin Helmy were also swept aside and vilified. However (and ironically) Umno was never able to dislodge Kelantanese parochialism, permitting PAS a foothold that it exploited for its own Islamist ends.

Umno political strategists were only to realise much later that the disappearance of the “left” was to open up the ideological terrain for the Islamists – many of whom modelled themselves on Egypt’s Muslim Brotherhood.

Indeed, the Islamists’ exclusion from the centres of power meant that they were able to focus on issues of social justice, benefiting in turn from the growing disgust with mainstream politics.

However, the IT explosion post-2000 has broken the establishment’s control over both the news and the media in general.

Indeed, the proliferation of voices unleashed by technology has been both deeply distressing and disorientating for those who believe in a monolithic Malay identity centred on the royal houses and the government-sanctioned Islamic beliefs and practices.

Many in the old elite (some of whom are actually quite young) remain Canute-like in their rejection of the new realities.

So where are we heading? First off, Malays as Muslims are still united by their faith. Nonetheless, many differences will continue to emerge as people explore intellectual and spiritual frontiers on their own.

Secondly, the keenest divide will be the differences between the haves and have-nots (determined, of course, by proximity to political power) within the Malay community as urban English-language speaking Malays continue to forge ahead, leaving their monolingual brothers and sisters in the lurch.

Furthermore, the increasing demographic dominance of the Malays – 50.1% of our total population of 27.5 million (more if we include the non-Malay bumiputra communities’ 11.8%) – means that the old anxieties of being overwhelmed by others no longer seem as dire.

This, therefore, is where the Malay community stands in 2012.