Acting premier Abdullah Ahmad Badawi today urged banks to restructure their loans to help customers affected by the Severe Acute Respiratory Syndrome (Sars) and the war o­n Iraq.

According to a Bernama report, he said officials from the Ministry of Finance and Bank Negara governor Dr Zeti Akhtar Aziz had recently discussed the matter with bank representatives.

The hospitality and tourism industries are among the worst hit sectors due to the war and the outbreak mainly because of the sharp decline in visitors from the Asia Pacific region.

More than 40 percent of the flights have been cancelled while many international trade fairs and missions (to the USA, West Asia and China) have also been called off or postponed.

Losing tourism money

Bernama

said the total number of passengers has dropped by almost 30 percent while Malaysia Airports duty-free shops have also reported reduced number of customers.

While the overall drop for both inbound and outbound tourism for March to June 2003 is about 35 percent compared with the same period in 2002.

Between March 15 and April 8 this year, cancellations amounting to some 20 percent of reservations overall were directly attributed directly to Sars.

The Malaysian Association of Tour and Travel Agents (Matta) said the potential loss to the tourism industry over the next three months is estimated at RM60 million.

Of this, RM20 million would be lost from tours within the country while another RM40 million would be lost from tourist spending o­n shopping, entertainment and food.

Apart from this, there have been postponements of sales orders which have led to increases in inventory and holding costs while businessmen were advised against travelling to the region and Malaysia.

Concerns over safety and health have also led to cancellations in scheduled regional conferences and meetings.

Culture of excellence

Meanwhile, Abdullah said Malaysian banks must develop world class capabilities in order to survive challenging economic climates now and in the future.

For this to happen, he said local banks "must embrace a culture of excellence and adopt a competitive mindset, create niches and refrain from copying other banks' products."

The acting premier also listed four important areas in building such world class institutions: prioritising customer service, building differentiated capability, embracing technology and going regional.