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Page 1: MALAYSIAN BAIL OUTS? - gbv.de · MALAYSIAN "BAIL OUTS"? ... Recapitalising Malaysian Banking ... Corporate Restructuring: Case Studies 179 ^—^ Wong Sook Ching Malaysian Airline

MALAYSIAN "BAIL OUTS"?Capital Controls, Restructuring

and Recovery

WONG SOOK CHINGJOMO K.S.

CHIN KOK FAY

ISINGAPORE

Page 2: MALAYSIAN BAIL OUTS? - gbv.de · MALAYSIAN "BAIL OUTS"? ... Recapitalising Malaysian Banking ... Corporate Restructuring: Case Studies 179 ^—^ Wong Sook Ching Malaysian Airline

Contents

About the Authors viiTables viiiFigures xiBoxes xiiNote on Currency xiiiAcknowledgements xivAbbreviations xviPreface xxiiiChronology: East Asian Crises and Recovery Timeline xxviiChronology: Malaysian Economic Crisis and

Corporate Restructuring xlv

( ! •

The 1997-98 East Asian Crises 1Jomo K.S.

From Miracle to Debacle 3Crises of a New Type 7Dangers of International Financial Liberalisation 9The Role of the IMF 16Conclusion 20

Crisis and Crisis Management in Malaysia, 1997—98 23Jomo K.S.

Capital Flows and Crisis 23Policy Responses and Deepening the Crises 28Mahathir's September 1998 Recovery Package 33Did Malaysia's 1998 Controls Succeed? 38

13. Corporate "Bail Outs" 47^ Wong Sook Ching

Concepts and Parameters 47Are Corporate "Bail Outs" Desirable? 52Concluding Remarks 59

' 4. Corporate Restructuring Policy Options 67Wong Sook Ching

Government or Market-led Corporate Restructuring 69Effective Corporate Restructuring 88

Page 3: MALAYSIAN BAIL OUTS? - gbv.de · MALAYSIAN "BAIL OUTS"? ... Recapitalising Malaysian Banking ... Corporate Restructuring: Case Studies 179 ^—^ Wong Sook Ching Malaysian Airline

Contents

Timing 90Malaysian Special Purpose Vehicles 93Corporate Debt Restructuring Committee (CDRC) 98Concluding Remarks 99

5. Bank Restructuring in Malaysia 112Chin Kok Fay

Why Bank Restructuring? 113Cleaning Up the NPLs 117Recapitalising Malaysian Banking Institutions 120Resolving Corporate Debt 122Bank Mergers 125Other Bank Restructuring Efforts 130Assessing Progress 132Concluding Remarks 137

•6. Corporate Debt Restructuring in Malaysia 139V_ Wong Sook Ching

From Privatisation to Corporate Restructuringand Renationalisation 139Effectiveness of the Special Purpose Vehicles 145The Corporate Restructuring Programme 146Concluding Remarks 172

»7. Corporate Restructuring: Case Studies 179^—^ Wong Sook Ching

Malaysian Airline System Bhd (MAS) 179The United Engineers (M) Bhd/Renong Bhd (UEM/Renong) Group 203The Light Rail Transport (LRT) Systems 234Concluding Remarks ' ' 242

\ 8. Conclusion: From Financial Crises to\^y Economic Recovery 256

Jomo K.S.Malaysia's Capital Controls: Policy Lessons 261Priorities for International Financial System Reform 271Concluding Remarks 274

Bibliography 171

Index 332