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No restructuring of development banks, says MOF

PARLIAMENT | The government has no plans to reorganise or restructure development financial institutions (DFIs), recognising their significance in supporting strategic industries, the Dewan Negara was told today.

Deputy Finance Minister Amiruddin Hamzah said DFIs played an important role in financing high-risk strategic industries.

“DFIs are taking high risks by financing companies that have a high risk of failure. 

"On the whole, loans to these companies account for 23.4 percent of loans disbursed by DFIs compared with 17.2 percent of loans by commercial banks, indicating the capability of DFIs in supporting the sector,” he said when winding up the debate for his ministry.

The six DFIs under Bank Negara Malaysia’s purview recorded more than a five-fold increase in loans growth amounting to RM141.9 billion as at end-October, compared with RM25.2 billion in 2002 for a total of 2.8 million borrowers thus far.

The DFIs are Bank Pembangunan Malaysia Bhd, SME Bank, Exim Bank Malaysia, Bank Pertanian Malaysia Bhd, Bank Simpanan Nasional and Bank Kerjasama Rakyat Malaysia Bhd.

Amiruddin said the role of DFIs was similar to that of commercial banks, but they needed to balance between their mandate and sustainability so that they stayed focused on their mandate to ensure that all economic sectors would be able to obtain financing.

Among the focused sectors of DFIs are agriculture, small and medium-sized industries, manufacturing, exports, high technology and shipping.

- Bernama

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