‘Failure to grasp commercial analysis led to bad loans’

, National 2 minutes, 24 seconds

BANDAR SERI BEGAWAN

THE government will now rely more on the expertise of private sector bankers in approving government loans for small and medium enterprises (SMEs) following the failure of government officers concerned to understand commercial loan analysis.

Most loans from the previous financing schemes that have fallen into arrears were those approved by the government that overruled banks’ recommendations, Minister of Energy and Industry at the Prime Minister’s Office Yang Berhormat Pehin Datu Singamanteri Colonel (Rtd) Dato Seri Setia (Dr) Hj Mohammad Yasmin Hj Umar said yesterday.

These schemes were implemented with private banks as conduits. Bankers assessed the loan applications using proven commercial analysis tools and gave their recommendations to government officers in charge of making decisions.

Government officers involved in the approval process for government financing “failed to grasp the commercial analysis submitted by the bank who provided the facilities’’, the minister said yesterday at the meeting of the 12th Session of the Legislative Council (LegCo).

This has resulted in outstanding loans of around $55 million owed to the government through two respective local banks which provided facilities for the loans.

In response to LegCo Member Yang Berhormat Datin Paduka Hajah Zasia Sirin who inquired whether there are plans to establish a special fund to provide financial assistance to SMEs, the minister said this was being reviewed.

“(This) review will be led by members from the private sector DARe’s (Darussalam Enterprise) board of directors and the banks who have the competence in doing financial analysis,’’ he said.

He added that these financial assistance schemes need to be updated in terms of process, applicant criteria and efficiency. It also needs to be transparent and monitored so that the assistance granted could be utilised solely for business purposes.

The minister said the government is also still studying a few options to help SMEs through investments from venture-capitalists and the setting up of a special bank for SMEs.

YB Pehin Dato Hj Mohd Yasmin shared that $46 million is owed to Bank Islam Brunei Darussalam (BIBD) over the period from 2006 to December 2015.

Meanwhile, another $8.8 million is owed to Baiduri Bank to date.

YB Pehin Dato Hj Mohd Yasmin stressed that the government will not pay these outstanding loans, but will instead work with them on repayment.

The minister also said in the previous financial scheme, which were not grants but loans that needed to be repaid, some individuals “had taken the opportunity not to repay their loans’’.

In an interview with media, YB Pehin Dato Hj Mohd Yasmin said some of them did not repay their loans, but were driving Porsches.

“This is very disappointing because the attitude of certain individuals which made it difficult for the government to reutilise the capital needed to keep the financial scheme going for the benefit of local enterprises that are really in need of assistance,’’ the minister said at LegCo.

The Brunei Times