Next in line?

The smartest way to avoid queuesEPA

NOT so long ago one of the stock photographs used to illustrate articles about the East-Asian economic boom would show a long queue of ordinary people waiting to buy shares in a new public offering. These days, the people lined up outside financial institutions in South-East Asia are more likely trying to get their money out. Thailand, the Philippines and Indonesia have all seen runs on banks or finance companies. Last month, Malaysia was added to the list, when customers of its biggest finance company, MBf, panicked at untrue rumours that the chief executive, Loy Hean Hong, was seriously ill, or even dead.

After the debacle in Thailand, where two-thirds of the country’s finance companies have been closed down, regional jitters are understandable. In the event, the run in Malaysia was handled with aplomb: the central bank issued a reassuring statement, andMBf kept branches open late and moved cash swiftly round the country. But Malaysian officials, who have boasted that the country’s economic “fundamentals” are healthier, and its banking system sounder, than those in Thailand can no longer be so confident.

The 21 domestically owned Malaysian banks are not swamped in the sea of bad debt that engulfed the Thais. In the property sector, Malaysia has, by most estimates, done far less overbuilding of offices, shopping malls and expensive flats. Foreign debt is less than half Thailand’s $90 billion. While Thailand’s economy will hardly grow at all this year, Malaysia’s government expects to achieve more than 7% growth this year, and more than 6% in 1998.

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