Progress in the restructuring of the large and politically-linked corporatations in Malaysia has been elusive, the World Bank said today.

Until now the corporate restructuring efforts have been relatively successful in respect of small, mid-sized and even larger indebted enterprises, the Washington-based bank said in its half-yearly regional report.

"But progress on the large and politically-connected corporate groups has been elusive," it said. It did not elaborate.

The report said the government has now taken more direct steps to take over and restructure some of the larger enterprises including Malaysia Airline System and United Engineers (Malaysia) Bhd.

"The hope is that the government can proceed with an orderly disposal of assets and avoid selling fire sale prices," it said.

"The key outstanding issue is resolution of the debt problems of the large conglomerates."

The report praised Malaysia's simulative fiscal posture, saying it was an appropriate policy given the weakness of the global economy, the deterioration in exports of electronics and the highly open nature of the Malaysian economy.