A LEGISLATIVE
council member yesterday called for a change in the corporate lending, urging
that banks should be allowed to finance large projects so that people don't
have to go to other countries to get financing.
"The Monetary Authority of Brunei Darussalam (AMBD) currently has
a policy which doesn't allow banks in Brunei to lend more than 20 per cent of
their capital assets fund, which complicates operations for banks who want to
finance larger projects," said Yang Berhormat Pehin Kapitan Lela Diraja
Dato Paduka Goh King Chin, appointed legislative council member.
He added that currently foreign banks have sufficient capital reserves
for such operations in Brunei. However, they can get more capital from their
holding company. "At this time, investors are forced to borrow money from
abroad for financing large projects," YB Pehin Dato Goh said during the
Eighth Legislative Council (LegCo) session yesterday.
He added that it takes (local) one to two weeks to get permission from
the holding companies for such transaction. "Hence, investors prefer to
borrow from abroad because the process is too long," he said, adding that
Brunei "should not follow other countries". In fact, it needs to
adapt to the country's economic conditions by "seizing this
opportunity".
YB Pehin Dato Goh added that if this policy could be reviewed by AMBD,
it can encourage foreign investors to invest in Brunei, which will in turn,
benefit the economy. "Loans can be based on the paid up capital of the
holding company, as the parent company's capital is large and capable enough to
cover large loans," he said.
He cited that in 2011 HSBC in the United Kingdom had recorded a market
capitalisation of £87.4 billion. Similarly, Standard Chartered Bank (UK) has a
market capitalisation of £33 billion and Maybank with US$20.98 billion.
"With total market capitalisation of these holding companies,
banks in Brunei should have no problems to offer larger loans to finance
large-scale projects," he said. He added that if banks are allowed to
offer big loans, it would receive a lot of interest from foreign investors
because of the corporate taxes as well. "The banks would be able to make
more profits and local children will have a wider range of employment opportunities,"
he said, adding that this would not burden the Ministry of Finance.
In response to YB Pehin Dato Goh's suggestion, the Second Minister of
Finance at the Prime Minister's Office, YB Pehin Orang Kaya Laila Setia Dato
Seri Setia Awang Haji Abdul Rahman Haji Ibrahim, said that he was unable to
comment because the AMBD was an independent entity, separate from the Ministry
of Finance. He added that while he cannot answer the question, he was sure it
will be put forward to the AMBD, as there are AMBD officials attending and
taking note of the Legislative Council session.
DEBBIE TOO
The Brunei Times
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