STATISTICAL TABLES Statistical Tables 233
TABLE 2.1 Number of Banks and Near-Banks in Hong Kong
31 December 1969 30 June 1980
Licensed banks: No. of main offices 73 113
No. of total offices, 362 1,078 including branches
Representative offices 21 104
Registered deposit-taking companies (including merchant banks and finance nil 283 companies)
Source: Banking Commissioner's Office. N W .j:>..
TABLE 2.2 Consolidated Balance Sheet of Licensed Banks, 1969-79 (million Hong Kong dollars) ~ ;:::: !::> End ofyear 1969 1971 1973 1975 1977 1979 ;:::: <"')-. Liabilities "-!::> Total deposits 12,297 18,785 26,191 36,343 53,019 88,014 CI) .... Amount due to banks abroad 1,845 3,000 8,911 21,243 36,850 73,685 ~ Other liabilities 2,385 3,070 5,148 8,011 10,497 24,159 <"') 16,527 24,855 40,250 65,597 100,366 185,858 ~ ~ Assets "" Cash 333 358 574 775 924 1 ,495 R<> Amount due from banks abroad 5,299 9,384 10,201 21,045 34,152 66,435 ::::: Loans and advances: a ;:::: Hong Kong 7,680 11 ,197 21,578 24,998 36,856 73,690 ~ Abroad 204 639 1,685 10,077 18,793 20,778 Ei ~ Investments: Hong Kong 659 1,051 1,922 2,891 3,836 5,462 "-~ Abroad 10 30 62 50 101 180 -.<"') -. Other assets 2,342 _ 2,196 ---4,228 5,761 5,704 17,818 ~ "" 16,527 24,855 40,250 65,597 100,366 185,858 -.;:::: Yl Source: Hong Kong Mon th ly Digest of Statistics and The 1975-76 Budget: Economic Background. ~ ::t:.. Ei'"" Statistical Tables 235
T ABLE 2.3 Consolidated Balance Sheet oi Deposit·taking Companies (million HK dollars)
31 December 1978 31 December 1979
Liabilities Deposits 10,447 24,495
Amount due to banks 6,386 11,463 in Hong Kong
Amount due to banks 27,398 31,160 abroad
Other Iiabilities 8,121 10,347 $52,352 $77,465 Assets Cash 5 4
Amount due from banks 6,760 20,029 in Hong Kong
Amount due from banks 8,943 13,559 abroad
Loans and advances: Hong Kong 10,139 13,566 Abroad 21,165 24,778
Investments: Hong Kong 1,062 1,157 Abroad 842 997
Other assets: Hong Kong 1,644 1,459 Abroad ~ ~ $52,352 $77,465
Source: Banking Commissioner's Office. 236 Financial Structures & Monetary Policies in s.E. Asia
TABLE 2.4 Bank Acquiritionll in Hong Kong
Name of bank acquired Controlled by/affiliated with Equity acquired (per cent)
1. Hang Seng Bank Ud. Hong Kong and Shanghai Banking 61 Corporation, Hong Kong
2. Far East Bank Ud. Citibank N.A., USA 76
3. Shanghai Commercial Wells Fargo Bank, USA 10 Bank Ltd.
4. Ka Wah Bank Ud. Yu Chuan Finance Ud., Malaysia 74
S. Dao Heng Bank Ud. Grindlays Bank, UK 100
6. Bank of Canton Ud. Security Pacific National Bank, 72 USA
7. Commercial Bank of Tokai Bank, Japan 10 Hong Kong Ud.
8. Chekiang First Bank Dai-Ichi Kangyo Bank, Japan 33 Ud.
9. Kwong On Bank Ud. Fuji Bank, Japan 55
10. Wing Lung Bank Ud. Chartered Bank Ud., UK 13.3
11. Wing Hang Bank Ud. Irving Trust Co., USA 51
12. Liu Chong Hing Bank The Mitsubishi Bank, Japan 25 Ud.
13. Hong Kong Metropolitan Becl Holdings, Luxembourg 43.64 Bank Ud.
14. Underwriters Bank Continentallllinois Bank, USA 60
15. Hong Kong Industrial Overseas Trust Bank, Hong Kong 94.34 and Commercial Bank Ud.
16. Hong Kong Chinese Overseas Trust Bank, Hong Kong 76 Bank Ud.
Source: Y. C. Jao, Banking and OIrrency in Hong Kong and current press announcements. Statistical Tables 237
TABLE 2.5 Indicaton of Financial Deepening
Indicators Initial date Terminal date Annual growth (per cent)
1. Per capita real balances HK$I,162 HK$2,027 7.2 of MI, adjusted for (end of 1971) (end of 1979) consumer price changes
2. Per capita real balances HK$2,007 HK$3,584 7.5 ofMl,adjusted by GOP (end of 1971) (end of 1979) deflator
3. Per capita real balances HK$ 701 HK$6,958 9.4 of M2, adjusted for (end of 1954) (end of 1979) consumer price changes
4. Per capita real balances HK$4,352 HK$12,303 8.3 ofM2, adjusted by GOP (end of 1966) (end of 1979) deflator
5. Ratio of MI to GOP 31.8 per cent 31.8 per cent 0 (end of 1971) (end of 1979)
6. Ratio of M2 to GOP 47.3 per cent 109.9 per cent 3.4 (end of 1954) (end of 1979)
7. Banking density, 0.42 2.02 6.5 narrowly defined (end of 1954) (end of 1979)
8. Banking density, 2.32 2.78 6.2 broadly defined (end of 1976) (end of 1979)
9. Relative share of 6.1 per cent 13.2 per cent 4.8 financial sectorin GOP (end of March 1961) (end of 1977)
10. Relative share of 2.19 per cent 2.7 per cent 6.2 financial sector in (November 1975) (May 1979) totallabour force Notes: MI = the sum of currency in the hands of non-bank public and demand deposits at licensed banks M2 = the sum of MI and savings and time deposits at licensed banks. GOP = Gross Oomestic Product at factor cost. Banking density narrowly dejined = Num ber of offices of licensed banks per 10,000 population. Banking density broadly dejined = The sum of offices of licensed banks, representative offices, and OTCs, per 10,000 population. Financial sec tor = monetary institutions, other financial institutions, financial services and insurance companies. Source: Underlying data from various issues of Hong KOllg Monthly Digest of Statistics, Economic Background, and Estimates of Gross Domestic Product. 238 Financial Structures & Monetary Policies in s.E. Asia
TABLE 2.6 Changes in Money Stock Attributable to Indicated Determinants (per cent)
Proximate Determinants MI M2 1961-72 1971-78 1977-79 1961-72 1971-78 1977-79
H 78.2 71.9 57.3 75.6 70.2 50.2 b 8.7 28.9 43.1 11.8 24.3 42.0 p 9.4 -4.0 -2.9 8.2 3.4 5.4 Interaction between band p 3.8 3.3 1.8 4.4 2.3 2.1
TABLE 2.7 Seasonally Adjusted Nominal Money Supply (million HK dollars)
Endof Annual Annual Annual year MI change M2 change M3 change (per cent) (per cent) (per cent)
1971 6,673 21,371 N.A. 1972 9,653 +44.7 27,539 +28.9 N.A. 1973 9,075 - 6.0 29,342 + 6.5 N.A. 1974 9,300 + 2.5 34,200 +16.6 N.A. 1975 11,427 +22.9 40,010 +17.0 N.A. 1976 14,068 +23.1 48,431 +21.0 N.A. 1977 18,103 +28.7 58,472 +20.7 N.A. 1978 22,307 +23.2 73,432 +25.6 77 ,114 1979 27,790 +24.6 95,332 +29.8 99,794 +29.4
Note: MI = currency in the hands of non-bank public plus demand deposits with licensed banks. M2 = MI plus savings and time deposits with Iicensed banks. M3 = M2 plus time deposits with DTCs less DTCs' cash holdings and claims on licensed banks. Source: Underlying data from Banking Commissioner's Office and Hong Kong Monthly Digest of Statistics Statistical Tables 239
TABLE 2.8 Annual Growth Rates o[ Money Stock (per cent)
Mi M2 Period Mean CV Range Period Mean CV Range
1954-9 6.8 80.4 1.4-16.3 1954-9 11.2 58.7 3.8-23.1 1960-70 11.4 36.5 6.2-19.2 1960-9 17.5 36.4 1.1-23.2 1971-9 20.5 71.4 -6.0-28.7 1970-9 21.2 32.0 6.6-29.8 1974-9 20.8 41.2 2.5-28.7 1974-9 21.8 21.4 16.6-29.8
Note: CV = Coefficient of variation.
TABLE 2.9 Currency Ratio and Money-Income Ratio (per cent)
End o[year Ci C2 Mi/GDP M2/GDP
1971 38.6 12.1 32.9 101.9 1972 30.2 10.6 40.0 114.0 1973 34.6 10.7 29.5 95.6 1974 34.6 9.4 26.4 97.1 1975 32.0 9.1 30.7 107.4 1976 31.2 9.1 29.8 102.6 1977 30.0 9.3 33.0 106.6 1978 29.4 8.9 35.0 ]]5.3 1979 26.3 7.7 31.8 109.1
TABLE 2.10 Agreed Bank Deposit Rates (per cent per annum)
Bank category Savings 7-day 3-month 6·month i2-month
Category I 5 5 6 7 8 Category 2 5 5 6.25 7.25 8.25 Category 3 5 5 6.5 7.5 8.5 Category 4 5 5 6.75 7.75 8.75 Category 5 5 5 7 8 9 240 Finaneial Structures & Monetary Policies in S.E. Asia
TABLE 2.11 Range of Variation for Lending Rates (per cent per annum)
Year Best lending rate Inter-bank lending rate
1970 8.0 5.625- 9.375 1971 7.0 - 8.0 3.5 - 7.75 1972 7.0 2.875- 7.0 1973 7.0 - 9.75 3.5 -11.0 1974 9.0 -12.0 4.5 -17.5 1975 6.5 - 9.0 0.75 -10.5 1976 6.0 - 6.5 1.0 - 7.2.5 1977 4.75- 5.5 1.0 - 6.0 1978 4.75- 8.75 4.0 -12.5 1979 9.0 -14.5 7.0 -19.5 1980 (rllst 7 months) 10.0 -16.0 3.5 -10.5
Source: Hong Kong Exchange Banks Association andHong Kong Monthly Digest ofStatistics.
TABLE 2.12 Annual Growth of Bank Loans and Advances (per cent)
Total Loans Mean CV Range
1961-68 14.7 65.3 -0.01- 27.8 1969-79 28.7 29.0 18.70- 49.8 Domestic and offshore loans 1970-9 Mean CV Range
Domestic loans 28.7 51.9 6.0- 48.5 Offshore loans 69.1 97.8 -12.7- 253.4
Note: CV = coefficient ofvariation Statistical Tables 241
TABLE 2.13 Sectoral Distribution o[ Domestic Bank Loans· (per cent)
Sector 1975 1976 1977 1978 1979
1. Manufacturing 11.9 12.8 11.8 12.6 11.6
2. Agriculture and fisheries 0.1 0.1 0.1 0.1 0.1
3. Transport and transport 9.0 7.1 7.9 7.9 6.9 equipment
4. Electricity, gas and telephone 1.0 0.2 0.1 0.5 0.4
5. Building and construction 7.2 7.7 8.3 10.0 9.9
6. General commerce 37.2 35.1 32.2 29.4 26.7
7. Miscellaneous (a) hotels and catering 1.3 1.5 1.3 1.0 0.6 (b) financial concerns 7.6 8.7 10.6 12.1 18.6 (c) stockbrokers 1.4 1.9 1.3 0.9 0.9 (d) individuals 17.2 18.0 18.5 18.2 17.5 (e) others 6.0 6.8 7.9 7.2 6.6 * End of year figures Source: Underlying data from Hong Kong Monthly Digest o[ Statistics. 242 Financial Structures & Monetary Policies in S.E. Asia
TABLE 2.14 Annuallnflation Rate in Hong Kong (per cent)
Measured by Consumer Price Index·
Mean CV Range
1947-59 2.6 180.4 -3.2-11.9 1960-9 1.9 160.5 -3.7- 3.8 1970-9 7.6 68.1 1.5-18.3
Measured by GDP Deflator
Mean CV Range
1962-9 2.4 71.7 -0.8- 4.6 1970-9 8.5 40.5 2.8-13.3 * Retail Price Index for 1947-fJ 3, General Consumer Price Index for 1964-73, and New Consumer Price Index and Hang Seng Index since 1974. Note: CV = coefficient ofvariation Source: Hong Kong Statistics, 1947-1967, and Hong Kong Monthly Digest of Statistics. Note: CV = coefficient of variation Statistical Tables 243
TABLE 3.1 Number o[ Financiallnstitutions in Singapore, 1965-80
Aug 1965 1970 1973 1975 1977 1978 1980
Commercial banks: Full-licence - local 10 II II 13 13 I3 13 - foreign 24 26 24 24 24 24 24 Restricted Iicence 12 12 13 13 13 Offshore banks 7 21 27 31 44
Total 34 37 54 70 77 81 94 (132) (176) (243) (261) (271) (302)
Representative offices of foreign 8 31 38 40 44 48 banks and merchant banks
Merchant banks 2 17 21 23 27 37 Discount houses 3 4 4 4 4 International money brokers 3 4 5 6 7 Finance companies 96 36 36 36 34 34 34
Asian Currency Units Commercial banks - local 4 5 6 7 7 8 - foreign 10 32 46 53 57 71 Merchant banks 9 13 16 20 31 Investment company I I I I
Total 14 46 66 77 85 III
Note: Figures in parenthesis are numbers of bank offices. Source: Monetary Authority of Singapore, Annual Reports, 1979/80; and MAS, The Financial Structure o[ Singapore (revised edition), June 1980, p.16. IV .j::. ~
TABLE 3.2 Assets and Liabilities of Commercial Banks in Singapore, 1967-79 (end year) (S$ million) ~ 1967 1970 1973 1976 1979 12 ;::; i::;. Liabilities: V:l Paid-up capital and reserves* 138.6 292.3 787.7 1,270.9 1,861.2 -..... Deposits of non-bank customers 1,828.2 3,194,9 5,799.8 8,488.5 12,178.4 ;::: Demand deposits 587.7 947.7 1,786.2 2,378.2 3,244.3 ;:; ::::- Fixed deposits 919.2 1,818.3 3,264.8 5,062.4 7,473.0 ...... , 302.1 412.9 708.5 999.2 1,394.8 ~ Savings deposits 0., Other deposits 19.2 16.0 40.3 48.7 66.3 Amounts due to banks 583.3 1,045.8 3,063.0 4,432.0 8,615.9 Ro:> 2,415.4 In Singapore 291.0 599.5 964.9 1,372.2 c~ Outside Singapore tt 292.3 446.3 2,098.1 3,059.8 6,200.5 ;::; S$NCD issued 617.8 515.0 ~ Other liabilities 233.4 469.0 1,068.8 1,717.6 3,577.3 ~ Total assets/liabilities 2,783.5 5,041.6 10,719.3 16,526.8 26,747.8 .~ ? Assets: -. Cash 45.1 43.3 70.4 105.3 161.1 -~ -.~ Balance with MAS 95.6 129.0 593.9 511.7 733.7 0., Money at call with discount houses 354.5 -491.4 695.7 ;::;-. Treasury bills 278.1 596.0 340.0 328.5 369.9 S$NCDsheld 380.1 166.2 ~ Amounts due from banks 557.2 940.8 1,746.5 3,528.7 5,646.6 ~
In Singapore 289.8 609.8 874.1 1,370.5 1,986.6 :::t:... 0., Outside Singapore tt 267.4 331.0 872.4 2,158.2 3,660.0 i::;. TADLE 3.2 (contd)
1967 1970 1973 1976 1979
Investments: In Singapore 116.4 232.0 727.0 1,365.7 1,639.6 Government Securities 77.8 90.3 333.0 762.0 908.9 Other securities t 38.6 142.0 394.0 603.7 730.7 Outside Singapore 94.4 93.1 90.0 81.1 51.0 Loans and advances to non-bank customers 1,105.6 2,167.7 5,146.5 7,271.7 12,058.7 Bills discounted or purchased 331.9 554.4 1,124.7 1,622.5 3,948.3 Other assets 159.2 285.0 525.8 840.1 1,277.0 V:i * Refer to local banks only. ...~ tOther securities include loans of public authorities, private company stocks, and equity investment. 1:;• tt Amounts due to banks and amounts due from banks outside Singapore include Asian Currency Units. ... Source: Monetary Authority of Singapore, Annual Reports, 1972-1979/80; Quarterly Bulletin, 1973-1980; and some information [ from MAS. ~ <:t' ~
IV ..j::. VI TABLE 3.3 Changing Composition 01 Bank Loans to Non-Bank Customers in Singapore, 1967-79 (end year) * N 0\~ 1967 1970 1973 1976 1979 per per per per per $ Million $ Million $ Million $ Million cent cent cent cent $ Millioll cent ~ ;::s I. General commerce (imports, exports, 493.5 44.6 678.6 31.3 1,549.3 30.1 3,335.0 37.5 6,643.3 41.5 $:l wholesale and retail trade) ;::s <") i::;' 2. Manufacturing 236.5 21.4 738.5 34.1 1,418.1 27.6 2,378.5 26.7 3,741.0 23.4 ...... V:l ...... 3. Building and construction and 119.9 10.8 178.4 8.2 728.4 14.2 1,134.1 12.8 1,453.7 9.1 ..... :::: housing loans <") ...... :::: 4. Mining and quarrying 7.9 0.7 16.2 0.7 ..... 33.4 0.6 72.3 0.8 79.7 0.5 ~ 5. Agriculture (mainly rubber, fisheries 13.5 1.2 25.1 1.2 '" and forestry) R<> ~ 6. Transport. storage and 10.9 1.0 33.1 1.5 237.7 4.6 273.4 3.1 722.5 4.5 C ;::s communication (':) ..... $:l 7. rinancial institutions 33.5 3.0 78.8 3.6 333.1 6.5 754.2 8.5 1,585.8 9.9 ~ 8. Professional and private individuals 134.5 12.0 285.0 13.1 596.9 11.6 610.0 6.9 900.8 5.6 d'...... 9. Others 55.3 5.0 134.0 6.2 249.6 4.8 336.7 3.8 880.2 5.5 -.<") ~. Total 1,105.6 IOD 2,167.7 IOD 5,146.5 IOD 8,894.2 IOD 16,007.0 100 S·'" Index IOD 196 465 804 1448 Yl ]:'r'l • Total loans and advances, including bills financing. Source: Monetary Authority of Singapore, Quarterly Bulletin, I sI Qr. 1980, p.21 and various issues; and MAS, Annual Report, ::t:... 1979-80. '"-.$:l TABLE 3.4 Consolidated Assets and Liabilities of Asian Currency Units, 1968-80 (US $ million)
Hnd period Nu III ber of Assets Total assets/ Liabilities ACUs Loans to IlIfer·bank o tlz er liabilities Deposits of Inter·bank Other 1/Oll·banks jimds assets non·banks funds liabilities
1968 1 1.4 29.0 0.1 30.5 17.8 12.6 0.1 1969 9 0.9 120.5 1.6 123.0(303.3) 97.9 23.7 1.4 1970 14 13.9 370.2 5.7 389.8(216.9) 243.7 141.0 5.1 1971 19 188.8 850.8 23.2 1,062.8(172. 7) 237.9 811.2 13.7 ~ ...... 1972 25 600.9 2,331.1 44.1 2,976.1(180.0) 398.7 2,550.1 27.3 1:;' 1973 46 1,214.3 4,961.9 101.0 6,277.2(110.9) 912.8 5,249.3 115.1 ...... (':)-. 1974 56 2,629.4(+16.5) 7,528.0 199.9 1O,357.3( 65.0) 1,614.2(+76.8) 8,531.4 211.7 I:l 1975 66 3,303.4(+25.6) 9.098.5 195.5 12,597.4( 21.6) 2,067.7(+28.1) 10,294.3 235.4 -- 1976 69 4,048.3(+22.5) 12,951.4 354.4 17,354.1( 37.8) 1,960.3(- 5.2) 15,067.2 326.6 ~ 1977 78 5,281.2(+30.5) 15,252.5 484.6 21,018.3( 21.1) 2,254.6(+15.0) 18,350.3 413.4 ~ 1978 85 6,376.8(+20.7) 19,829.7 833.6 27,040.1( 28.7) 3,600.0(+59.7) 21,987.2 1,452.9 --n:, 1979 101 8.484.0(+33.0) 28,093.7 1,585.0 38,162.7( 4IJ) 5,771.4(+60.3) 29,424.9 2,966.4 '" 1980 114 12,402.3(+46.2) 39,552.3 2,438.0 54.392.6( 42.5) 9,322.2(+61.5) 40,879.6 4,190.8
Notes: I. Figures in parenthesis are annual growth rates in percentages. 2. Asian Currency Units (ACU) are separate accounting units of banks and financial institutions authorised by MAS to operate in the ACM. Sec Table 3.1. Source: Monetary Authority of Singapore, Quarterly Bulletin, 4th Qr. 1980, and various issues, and MAS, The Financial Structure of Singapore (revised edition), June 1980, p. 64.
N ~ -...J 248 Financial Structures & Monetary Polkies in S.E. Asia
TABLE 3.5 ASIAN BOND ISSUES, 1971-80
No. of issues Amount, million Coupon rate Maturity ofinterest* (years) (per cent)
1971 1 US $10 8.5 10
1972 2 US $20 7.75 10-15 DM 100
1973 3 US $100 5*,6~,8* 9-15
1974 0
1975 3 US $47 9,9~ 5-7
1976 9 US $247 6'1r-9~, or 5-15 DM50 floating rate t
1977 14 US $315 6-8.625,or 5-15 DM 100 floating rate t A $10
1978 12 US $220 9~, or 5-15 SDR25 floating rate t Y 15,000 DM40 A $15
1979 8 US $315 7,or 7-15 DM 70 floating rate t
1980 8 US $289 9'1r-12,or 3-8 (J an.-Sept.) floating rate t
Total 60 US $1,677 +DM 360 +SDR 25 +A $25 + ~15,000 = abt US $1,849 Notes: 1. Of the 60 issues, 52 are straight bonds (public offering), 7 are convertible bonds (public offering) and one is a private placement. 2. For more details with names of issuers, see Lee Sheng-Vi, 'Financial Structure and Monetary Policy of Singapore', Nanyang University, Institute of Economics and Business Studies, Paper No. 35, December 1979, pp 44-7. 3. *Coupon rates of interest refer to US $ bonds only. 4. t Floating rates are usually v.. per cent above 6-month LIBOR or SIBOR. Source: Through the courtesy of the Monetary Authority of Singapore and DBS - Daiwa International Securities Ltd. Statistical Tables 249
TABLE 3.6 Deposits, Loans and Investments o[ Financial Institutions, os at end 1979 ($ Million)
Deposits o[ Loans to Investment non-bank non-bank (securities and customers customers equities)
1. Commercial banks 12,178 16,007 2,061
2. Finance companies 1,812 1,828 111
3. Merchant banks 3,498 136
4. Post Office Savings Banks 2,525 1,155 896
5_ Central provident funds 7,516t 6,918
6. Insurance companies 1,022* 110 492 (life and general) t Refers to members' balance. * Refers to Singapore Insurance Fund. Source : Monetary Authority of Singapore, Annual Report, 1979-80; Post Office Savings Bank, Annual Report, 1979, p.21; and Central Provident Fund, Annual Report, 1979. IV VI Cl TABLE 3.7 Interest Rates of Commercial Banks, Finance Companies and POSB (average rates) (per cent per annum) ~ 1967 1970 1973 1976 1979 1980, June ;:: I:l ;:: Commercial banks: ("") ~.
Minimum lending rate 8% 8 9.00 6.78 9.48 11.40 --V:l ...... Average lending rate 9.90 8.60 10.50 12.20 ~ Fixed deposit rate: 3 months 5% 5% 6.50 3.76 7.15 9.20 ("") ...... Fixed deposit rate: 12 months 6 6 7.25 5.31 7.65 8.75 ::::: Savings deposit rate 3 3% 4.00 3.52 6.38 7.88 a Finance companies: Re ~ Cl Average lending rate 10.40 10.80 9.90 11.20 ;:: Fixed deposit rate: 3 months 6.70 4.90 8.1 0 10.20 r:, Fixed deposit rate: 3-12 months 7.50 6.70 7.60 9.10 ~ Saving deposit ra te 5.80 5.50 7.00 8.70 ~ Post Office Savings Bank: ~ ri'-- Saving deposit rate 3 4 4 5.50 6.00/4.25* 7.00/5.00* ~.
Note: * A two-tier interest rate system was introduced in September 1978. For example, in 1979 the interest rate for amounts up to S· $100,000 was 6 per cent and that for amounts exceeding $100,000 was 4.25 per cent. !J1 Source: Monetary Authority of Singapore, Quarterly Bulletin, 1973-80. ~ ~
""~. TABLE 3.8 Money Supply (seasona/ly adjusted) ($ million)
Otrreney Demalld Quasi·money Net deposits End il/ aetil'e with non-bank period cireulatioll Deposits Total Fixed deposits Savingand finaneial andS$NCD other deposits institutions t
1966* 507.9 498.0 886.0 628.0 258.0 1967* 423.4 561.9 1,227.2 905.9 321.3 1968* 501.5 670.8 1,561.8 1,226.1 335.7 1969* 568.6 773.1 1,911.2 1,540.4 370.8 ~ 1970* 681.9 892.4 2,208.3 1,779.4 428.9 292.1 ...... 1;;' 1971 788.6 915.5 2,457.3 1,979.8 477.5 413.3 ...... 1972 978.4 1,330.8 2,910.3 2,306.3 604.0 525.0 1973 1,085.2 1,478.8 3,482.5 2,766.5 716.0 676.9 2' 1974 1,270.0 1,522.6 4,079.8 3,335.0 744.8 824.3 - ~ 1975 1,596.7 1,806.4 4,693.1 3,809.3 883.8 1,018.0 ~ 1976 1,902.0 2,025.8 5,197.2 4,201.1 1,966.1 1,626.6 1977 2,192.1 2,135.0 5,374.3 4,314.4 1,059.9 2,210.7 ~ 1978 2,527.0 2,302.2 5,905.6 4,730.1 1,175.5 2,948.3 1979 2,879.3 2,715.4 7,159.0 5,822.0 1,337.0 3,719.4 1980P 3,137.0 2,997.7 9,930.4 8,277.4 1,653.0 4,466.4 April
Note: 1.* Money supply is seasonally adjusted except that ror 1966-70, which is of the actual figures. 2.t Non-bank tinancial institutions include finance companies and Post Office Saving Bank. These institutions' deposits with commercial banks are netted out from their customers' deposits with them in order to arrive at the net 'deposits' in this column. 3. P = provisional N Souree: Monetary Authority of Singapore. Quarterl)' Bulletil/. 1973-80; and Yearly Book 0/ Statisties, Singapore 1979-80, and VI previous issues; and Ministry of Trade and Industry, Eeonomie Survey 0/ Sillgapore, 1980. - N TABLE 3.9 Money/lncome Ratios, 1966-80 VI ($ Million) N
MI M2 M3 GDP MI/GDP M2/GDP TD/GDP M3/GDP at current ratio ratio ratio ratio marker :;:."l"J prices § '"' 1965 890.5 1,657.3 ;5'"- 1966* 1,005.9 1,891,9 3,331 0.30 0.57 0.27 V:i .... 1967* 985.3 2,212.5 3,746 0.26 0.59 0.33 ;::: 1968* 1,172.3 2,734.1 4,315 0.27 0.63 0.36 ;:; 1969* 1,341.7 3,252.9 5,020 0.27 0.64 0.38 ::::- 1970* 1,574.3 3,782.6 4,074.7 5,805 0.27 0.65 0.38 0.70 ::::; ~ 1971 1,704.1 4,161.4 4,574.7 6,823 0.25 0.61 0.36 0.67 "- 1972 2,309.2 5,219.5 5,744.5 8,156 0.28 0.64 0.36 0.70 Re 1973 2,564.0 6,046.5 6,723.4 10,205 0.25 0.59 0.34 0.66 1974 2,792.6 6,872.4 7,696.7 12,543 0.22 0.55 0.33 0.61 ~ S2 1975 3,403.1 8,096.2 9,114.2 l3,373 0.25 0.61 0.36 0.68 ;::; 1976 3,927.8 9,125.0 10,751.6 14,575 0.27 0.62 0.35 0.74 .... ~ 1977 4,327.1 9,701.4 11,912.1 15,958 0.27 0.60 0.33 0.74 ~, 1978 4,829.2 10,734.8 13,683.1 17,569 0.27 0.61 0.33 0.78 1979 5,594.7 12,753.7 16,473.1 19,590 0.29 0.65 0.42 0.84 ~ 1980P 6,l34.7 16,065.1 20,531.5 22,438 0.27 0.72 0.45 0.92 ~ -.~ "- Note: 1. This Tab1e is derived from the previous Table 3.8. -. 2. M1 = Currency + Demand Deposits - Y:l M2 = MI + quasi-money ~ M3 = M2 + Net deposits with non-bank financial institutions. TD = Time and savings deposits or quasi-money ::t:.. Source: Same as Tables 3.8 and 3.10. '"-.~ TABLE 3.1 0 Percentage Change 01Money and Income, 1967-80
Change 01 Change 01 Consumer Change 01 Change 01 Change 01 GDPat GDPat Price MI M2 M3 current constant Index, (per cent) (per cent) (per cent) market (1968) (Nov.1970 prices prices = 100) (per cent) (per cent)
1967 - 2.0 + 16.9 + 12.5 + 11.8 95.3 1968 + 19.0 + 23.6 + 15.2 + 13.9 96.0 ~ ...... 1969 + 14.5 + 19.0 + 16.3 + 13.7 95.8 ;;;. 1970 + 17.3 + 16.3 + 15.6 + 13.7 96.1 ...... -.(":> 1971 + 8.2 + 10.0 + 12.3 + 17.5 + 12.5 97.9 ~ 1972 + 35.5 + 25.4 + 25.6 + 19.5 +13.4 100 - 1973 + 11.0 + 15.8 + 17.0 + 25.1 + 11.5 117.7 ~ 1974 + 8.9 + 13.7 + 14.5 + 22.9 + 6.3 144.0 ~ 1975 + 21.9 + 17.8 + 18.4 + 6.6 + 4.1 147.7 -(1) 1976 + 15.4 + 12.7 + 18.0 + 9.0 + 7.5 144.9 '" 1977 + 10.2 + 6.3 + 10.8 + 9.5 + 7.9 149.5 1978 + 11.6 + 10.7 + 14.9 +10.1 + 8.6 156.8 1979 + 15.9 + 18.8 + 20.4 + 11.5 + 9.3 163.1 1980P + 9.7 + 26.0 + 24.6 + 14.5 + 10.2 177.0 Note: I. Change - change from year to year. 2. Change of M I was - 2 per cent in 1967, which was somewhat distorted in statistics, owing to the issues of new currency, and should not be compared with that in other years. Source: MI, M2 and M3 - figures are derived from Table 3.9. GDP - Yearbook 01 Statistics, Singapore, 1979-80. N VI W N VI +:>.
TABLE 3.11 Balance of Payments and Ozanges in Qmency. M1 and M2. 1967-80 :!l ($ Million) ;:z § Ozange 0/ currency in active circulation OzangeofM1 OzangeofM2 Overall balance ofpayment t") (.~C) (.1. MI) (.1. M2) (B/P) ~ V:l 1967 - 84.5 - 20.6 + 320.6 + 304.2 S 1968 + 78.1 + 127.0 + 521.6 + 663.5 ;:; 1969 + 67.1 + 169.4 + 518.9 + 292.4 2" 1970 + 113.3 + 232.6 + 529.7 + 564.8 1971 + 106.7 + 129.8 + 378.8 + 974.8 ~ 1972 + 189.8 + 605.1 + 1058.1 + 945.0 ~ 1973 + 106.9 + 254.8 + 827.0 +1,005.2 + 184.8 + 228.6 + 825.9 + 718.4 ~ 1974 ;:z 1975 + 326.7 + 610.5 + 1223.8 + 966.4 ~ 1976 + 305.3 + 524.7 + 1028.2 + 737.4 i:i 1977 + 290.1 + 399.3 + 576.4 + 763.3 ~ 1978 + 334.9 + 502.1 + 1033.4 +1,511.5 1979 + 352.3 + 765.5 + 2018.9 +1,137.1 d' 1980P + 257.7 + 540.0 + 3311.4 +1,435.8 ;::;. -~. Note: Change = change from year to year. Source: Currency, MI and M2 - figures are derived from Table 3.8. 5' Balance of payments - Yearbook of Statistics, Singapore, 1979-80. ~ M ::t.. c., 1::;' TABLE 4.1 Sources and Uses of COlllmercial Ballk Funds in Malaysia. 1966-79 (end year) (M$ Million)
1966 1969 1973 1977 1979
Sourees: Domestic: Capital and reserves 1 101 131 251.8 555.9 713.7 Deposits 1,982 3,036 6,098.5 12,261.7 19,141.6 Pu blic Sector2 174 293 440.2 1,875.3 4,013.0 Private Sector 1,808 2,743 5,658.3 10,386.4 15,128.6 Balances held for banks3 254 383 702.0 570.5 1,017.3 Other 148 191 602.2 1,324.4 2,345.0 V:l -- $:i -- ..... 2,485 3,741 7,654.5 14,712.5 23,217.6 1:;' ..... Foreign: -.(") Balances held for banks4 254 305 755.9 1,336.1 1,631.7 I:l Other 22 34 70.2 144.5 175.8 - ~ 276 339 826.1 1,480.6 1,807.5 ~ ~ Total 2,761 4,080 8,480.6 16,193.1 25,025.1 '" Uses: Domestic: Cash 98 101 262.5 213.1 326.8 Statutory reserves 68 150 487.9 725.2 919.4 Balances with bankss 268 409 759.3 897.3 2,339.6 Investment 1,366.0 3,509.7 3,798.7 Treasury bills 226 613 624.8 1,411.0 1,208.3 Government securities 84 295 650.7 1,881.2 2,313.4 Private securities 33 40 90.5 217.5 227.0 N VI VI (continued on p.256) TABLE 4.1 (contd) N VI 0\ 1966 1969 1973 1977 1979
Loans and advances 1,237 1,802 4,595.0 9,043.6 14,685.9 ~ Overdraft and other 5,570.5 8,417.9 ;::: advances s:::. ;::: Term 10ans 2,809.5 4,794.2 ~ Trade bills 663.6 1,473.8 -.s:::. Fixed assets 114 140 167.7 282.6 384.7 "- ~ Other 111 125 245.6 490.0 874.9 ...... :::l ;:; 2,239 3,675 7,884.0 15,161.5 23,330.0 .... :;:: Foreign: a Balances with banks 449 185 291.0 483.8 1,074.9 Re Trade bills 49 197 272.1 514.2 573.9 ~ Investments 10 3 3.2 10.4 15.0 Cl Other 14 20 30.3 23.2 31.3 ;::: ("\) 522 405 596.6 1.031.6 1,695.1 ~ ~ Note: 1. Capital and reserves refer to domestic banks only. ~ 2. Refer to Federal Government, State Governments, statutory authorities and local governments. "--. 3. Include amounts borrowed from commercia1 banks and merchant banks. ~ -.("\) 4. Include clearing balances with Central Bank. 5. Include money at call and loans to commercial banks. -.'";::: Source: Bank Negara Malaysia, Annual Reports, 1965-1979, pp.65. ~ ~ ~
'"s:::.-. Statistical Tables 257
TABLE4.2 Direction of Commercial Bank Lending in Malaysia, 1967-79 (M$ Million)
1967 1970 1973 1977 1979
General commerce 502.0 756.0 1,059.4 1,400.5 2,348.2 (35.0) (32.0) (23.6) 07.7) 08.7)
Manufacturing 213.4 465.6 883.5 1,594.7 2,564.7 (14.9) 09.7) 09.7) (20.1 ) (20.4)
Mining and quarrying 47.2 51.2 98.9 96.3 122.6 (3.3) (2.2) (2.2) 0.2) (1.0)
Real estate and construction 142.6 206.5 521.1 1,058.0 1,843.3 (10.0) (8.8) 01.6) (13.4) 04.7)
Agriculture 128.6 240.3 406.1 661,1 1,013.0 (9.0) (10.2) (9.0) (8.4) (8.0)
Professional and individuals 232.8 376.9 889.8 1,728.3 2,970.1 (16.2) 00.0) 09.8) (21.8) (23.6)
Others 166.3 263.1 633.6 1,377.6 1,720.1 (11.6) (11.1) (14.1 ) (17.4) (13.7)
Total 1,432.9 2,359.6 4,492.4 7,916.5 12,582.0 Index 100 165 314 552 878
Note: 1. Figures in parenthesis are percentages. 2. Figures exc1ude trade bills. Source: Bank Negara Malaysia, Annual Report, 1979, p. 71, and various issues. N VI 00
:!! ;:: § r" §: TABLE 4.3 Total Assets of the Financial System of Malaysia, 1960, 1970 and 1977 ~ ~ 1960 1970 1977 r" M$Million per cent M$Million per cent M$ Million per cent E' 1. Monetary institutions 2,346 66.0 6,882 59.2 23,949 60.6 a Central Bank 184 5.2 2,227 19.2 7,701 19.5 R<> 1 Currency Board 930 26.2 195 1.7 55 0.1 ~ Commercial banks 1,232 34.7 4,460 38.4 16,193 40.9 o ;:: ~ 2. Non-bank financial institutions 10 0.3 573 4.9 4,178 10.5 ~ Finance companies 10 0.3 531 4.6 2,610 6.6 ~ Merchant banks 913 2.3 Discount houses 42 0.3 649 1.6 ....~ Credit Guarantee Corporation 6 ;::;.
~. 3. Development finance institutions 133 1.1 892 2.3 Malaysian Industrial Development Finance 98 0.8 331 0.8 ~. Agricultural Bank of Malaysia 10 440 1.1 ~ Borneo Development Corporations 21 0.2 32 ~ Sabah Credit Corporation 4 39 ::t... Development Bank of Malaysia 49 c., SS· TABLE 4.3 (contd)
1960 1970 1977 M$ Million per cent M$ Million per cent M$Million per cent
4. Provident, pensions and insurance funds 836 23.5 3,156 27.2 8,161 20.6 Emp10yees provident funds 633 17.8 2,265 19.5 5,843 14.8 Other pension and insurance funds 203 5.7 891 7.7 2,318 5.9
5. Savings institutions 267 7.5 645 5.5 1,761 4.5 National Savings Bank/Post Office SavingsBank 157 4.4 296 2.5 905 2.3 Cooperative societies2 110 3.1 349 3.0 856 2.2 V:i 3 ~ 6. Other financial intermediaries 93 2.7 233 2.0 603 1.5 ..... c:;;...... Total 3,553 100 11,622 100 39,544 100 -.~ !::l ""- Index 100 327 1,113 ~ ~ Note: 1. Malaysia's estimated share of assets of the Currency Board. ""- 2. Include Bank Rakyat and Co-operative Central Bank. ~ 3. Include building societies (principally), Pilgrim's Management and Fund Board and unit Trusts. '" Source: Bank Negara Malaysia, MOlley alld Ballkillg ill Malaysia. Kuala Lumpur, 1979, p. 64.
N VI \0 N TABLE 4.4 Outstanding Loans, Investments and Interest Rates oi Financial Institutions 01 Malaysia, as at end 1979 o0'1 Loans Financial institu tions outstanding Investments Lending rate oi interest (M$ Million) (M$ Million) :!!;:: !::l I. Commercial banks 14,685.9* 3,798.7 Free since October 1978, except lending to bumiputera and smaJI ;:: enterprises. ~ Ei'..... 2. GeneraJIy negotiable Finance companies 2,655.6 265.8 V,) Housing Loans = 9 per cent maximum as directed by Bank Negara Hire purchase of motor vehicles, capital equipments and logging ~ machine - flat rate = 10 per cent or effective rate =about 17 per ~ cent 2'
3. Merchant banks 1,322.0 221.6 Lending rate is slightly higher than that of commercial banks, ~ because cost of fund is higher. R<> Industrial finance institutions: o~ 4. Malaysian Industrial Development Medium- and long-term loans and factory mortgage loans - 8.5.- ;:: Finance Berhad 208.2 9.25 per cent (';) Hire-purchase loans - 9 -9'12 per cent B' ~ 5. Development Bank of Malaysia 56.1 8-9 per cent .....d' 6. Borneo Development Corporation 15.4 9.5 per cent Q: 7. Sabah Credit Corporation 52.1 Term loans for agriculture - 7 per cent ~ Industrial and commercial loans - II per cent ~. ~ 8. Sabah Development Bank 63.1 7.5-11 per cent ~ 9. Industrial Development Bank of Preferential rate of 4.5 per cent for ship repairs ~ Malaysia 2.9 financing schemes Ei'"" TABLE 4.4 (contd)
LOIJns Fintlncial institutiom outstanding Investments Lending rate of interest (MS Million) (MS Million)
Rural credit institutions : 10. Agricultural Bank of Malaysia 161.9 Agricultural equipment loans - 8 per cent Loans for short-term padi production - 8.5 per cent General- 9-11 per cent Bumiputera- 8-9 per cent up to $500,000; 1l>-11 per cent above $500,000 Non-Bumiputera - 8-9 per cent up to SI50,OOO V:l 11. Bank Rakyat 162.8 Loans for short-term padi production - 6 per cent ~ ..... Loans for agriculture, land development and housing - I l>-13 per 1;;. cent ..... Loans for commerce - 10 per cent 2· Other Financiallnstitutions: 12. National Savings Bank 1,093.3 - ~ c;:,.. 13. Employees Provident Fund 319.6 7,492.1 ii" 14. Malaysia Building Society 503 Loans under the Low Cost Housing Scheme - 5.S per cent Other housing loans- 9.25-10 per cent
15. Borneo Housing Mortgage Finance 211.2 Residential housing - 8.75-9 per cent Commercial housing - I J.5 per cent
16. Insurance Companies 248.8 830.2
17. Urban credit co operative societies 274 9-12 per cent N Note: "Refer to loans to non-bank customers and include overdraft, advances, term loans and trade bills. 0\ Source: Bank Ncgara Malaysia, Annual Report, 1979. - TABLE 4.5 Deposits and Interest Rates of Financial Institutions in Malaysia, as at end 1979 N 0\ N Total deposits Financial institu tions (M$ Million) Interest rates
I. Commercial banks 19,141.6 Negotiable since October 1978 ~ ~ 2. l'inance companies 3,623.3 Free from Central Bank control since 1 August 1973, and negotiable § ("') 3. Merchant banks 1,025.3 Negotiable -S· 4. National Savings Bank 1,031.3 Savings deposit rate = 6.5 per cent ~ 5. Employee's Provident Fund 7,583.4 7.25 per cent on the open balances of contributors' accounts ("') (contributors' E" balances) ~ 6. Agricultural Bank of Malaysia 551.1 Fixed deposit rates for 1-12 months - 5.5-6.5 per cent R<> fixed deposits over 1 year - negotiable ~ Savings deposit rate = 6.5 per cent o ~ !"\) 7. Bank Rakyat 256 Fixed deposit rates for 3-12 months = 5.5-7.25 per cent; for one year and over, negotiable. E" Savings deposit rate = 6.75 per cent ~
8. Malaysia Building Society 53.5 l'ixed deposit rates of 6 and 12 months = 5-7.5 per cent ~ Savings deposit rate = 7.5 per cent -~. ~. 9. Borneo Housing Mortgage Finance 35.1 Fixed deposit rates of less than one year = 4 per cent for one year and over = 7.25-8.5 per cent S· ~ 10. Urban credit cooperative societies 67.7 Fixed deposit rates of 1-12 months = 5.375-7.5 per cent Savings deposit rate = 6.5 per cent M ~ too Source: Bank Negara Malaysia, Annual Report, 1979. S· TABLE 4.6 Mone)' Supply o[ Malaysia, 1966-80 (M$ Million)
Elld 01 rrellc)' in Demand Quasi·moneJ!. Net deposits Outstanding deposits period active cir· depositof Total Fixed Savings and with finance with National Savings culatioll private deposits other deposits companiest Bank sector
1966 908.6 743.4 1,187.2 841.9 345.3 150* 206.2 1967 171.6 753.0 1,452.4 1,011.8 440.6 160* 222.7 1968 805.2 891.8 1,749.8 1,259.8 490.0 175* 239.1 CI) ~ 1969 930.5 951.8 2,044.3 1,488.0 556.3 193.7 261.8 ..... r;;. 1970 1,000.2 1,032.3 2,332.1 1,729.2 602.8 257.8 275.9 ..... 1971 1,060.7 1,059.7 2,765.9 2,095.1 670.8 301.0 298.9 -. 1972 1,269.4 1,446.1 3,135.8 2,292.1 843.7 463.4 351.2 2 1973 1,718.1 2,017.1 4,068.2 2,980.9 1,087.3 667.4 417.1 -~ 1974 2,029.7 2,025.6 4,963.6 3,640.3 1,323.3 781.1 525.0 c:;:,.. 1975 2,239.0 2,109.8 5,922.0 4,318.9 1,603.1 951.3 587.0 1976 2,627.7 2,629.3 7,802.7 5,875.0 1,927.7 1,198.8 684.9 -~ 1917 3,112.3 3,015.1 9,071.1 6,585.5 2,485.6 1,508.7 833.0 1978 3,578.4 3,664.4 10,953.2 7,926.3 3,026.9 J ,947.4 973.8 1979 4.111.0 4,250.9 14,668.2 11,026.9 3,641.3 2,797.7 1,022.2 1980, March 4,314.2 4,463.1 16,327.0 12,473.7 3,853.3 3,003.2 1,090.0 (Jan.) Note: I. * Figures are arbitrarily guessed. 2. t Net deposits with finance companies = deposits from customers less finance companies' deposits with banks. Source: Bank Negara Malaysia, Quarterly Ecollomic Bulletin, December 1979; and Monthly Statistical Supplemellt, May 1980.
N 0\ IN N 0\ ~ TABLE 4.7 Money / Income Ratios o[Malaysia, 1966-79 (M$ Million) ~ GNPat ;:: End MI M2 M3 current Ml/GNP M2/GNP TD/GNP M3/GNP ;::s:::. period market ratio ratio ratio ratio ~ i::;' prices ..... CI:) ..... 1966 1,652,0 2,839.2 3,195.4 9,344 0.18 0.30 0.13 0.34 .... 1967 1,524.6 2,977.0 3,359.7 9,704 0.16 0.31 0.15 0.35 :;;: ~ 1968 1,697.0 3,446.8 3,860.9 10,071 0.17 0.34 0.17 0.38 ::::- 1969 1,828.3 3,926.6 4,382.1 10,973 0.17 0.36 0.19 0.40 ::, 1970 2,032.5 4,364.6 4,898.4 11,629 0.17 0.38 0.20 0.42 ~ 1971 2,120.4 4,886.3 5,486.2 12,163 0.17 0.40 0.23 0.45 '"Ro 1972 2,715.5 5,851.3 6,665.9 12,906 0.21 0.45 0.24 0.52 ~ 1973 3,735.2 7,803.4 8,887.9 16,224 0.23 0.48 0.25 0.55 0 1974 4,055.3 9,018.9 10,325.0 21,234 0.19 0.42 0.23 0.49 ;:: ~ 1975 4,348.8 10,270.8 11,809.1 21,684 0.20 0.47 0.27 0.54 ..... 1976 5,257.0 13,059.7 14,943.4 27,033 0.19 0.48 0.29 0.56 s:::. 1977 6,127.4 15,198.5 17,540.2 31,074 0.20 0.49 0.29 0.56 ~ 1978 7,242.8 18,196.0 21,133.1 35,090 0.21 0.53 0.33 0.61 d' 1979 8,361.9 23,030.1 26,850.0 40,740p 0.21 0.57 0.36 0.66 .....-. 44,92lf ~ 1980 Mar. 8,777.3 25,104.3 29,197.5 -.~ Note: TD = time and savings deposits or quasi-money. '"S· p = provisional figure for the year 1978 ~ f forecast for the year 1980. = ~ Source: Table 4.6. ~ '"i::;' TABLE 4.8 Change in Currency, MI, M2, and M3, GNP at Current and Constant Prices and CP1 in Malaysia, 1967-79
Change in Change oi GNPat Consumer Endyear currency Change in Change in Change in GNPat constant Change Price Change in active MI M2 M3 current 1970 Index * circulation prices prices (1967= (M$ Million) 100) (per cent) (per cent) (per cent) (per cent) (per cent) (per cent) (per cent)
1967 -15.1 - 7.7 + 4.9 + 5.1 + 3.9 JOO 1968 + 4.4 +11.3 +15.8 +14.9 + 3.8 99.8 - 0.2 1969 +15.6 + 7.7 +13.9 +13.5 + 9.0 99.4 - 0.4 ~ 1970 + 7.5 +11.2 +11.2 +11.8 + 6.0 11,822 101.3 + 1.9 ....~ c:;;. 1971 + 6.1 + 4.3 +12.0 +12.0 + 4.6 12,674 + 7.2 102.9 + 1.6 .... 1972 +19.7 +28.1 +19.7 +21.5 + 6.1 13,903 + 9.7 106.2 + 3.2 ~ 1973 +35.3 +37.6 +33.4 +33.3 +25.7 15,365 +10.5 117.4 +10.5 I::l..... 1974 +18.1 + 8.6 +15.6 +16.2 +30.9 16,545 + 7.7 137.8 +17.4 1975 +10.3 + 7.2 +13.9 +14.4 + 2.1 16,916 + 2.2 144.0 + 4.5 ~ ..... 1976 +17.4 +20.9 +27.2 +26.5 +24.7 18,743 +10.8 147.8 + 2.6 ""' 1977 +18.4 +16.6 +16.4 +17.4 +14.9 20,072 + 7.1 154.8 + 4.7 ~ 1978 +15.0 +18.2 +19.7 +20.5 +12.9 21,535 + 7.3 162.4 + 4.9 1979 +14.9 +15.5 +26.6 +27.1 +16.1 23,264 + 8.0 170.7 + 5.1 1980 10.3f 24,770f + 6.5f
Note: 1. Change = year-to-year change. 2. * The ePI is a simple average of monthly indices. 4. f = forecast for the year 1980. Source: Tables 4.6 and 4.7; the 1980 Budget of Malaysia, StatisticaJ Table I; Bank Negara Malaysia, Annual Report, 1979; and various issues (for GNP). Bank Negara Malaysia, Quarterly Economic Bulletin, December 1979 (for consumer price index). N 0'\ VI IV TABLE 4.9 Determinants oi Change in Money Supply in Malaysia 0\ 0\ Change in M$ Million M$ Million at end 1979 1965-60* 1961-65 1966-70 1971-5 1976-9 ~ ;:s I::> ;:s I. Credit to private sector + 294.0 + 599.3 +1,123.3 + 3,831.4 + 8,565.6 14,641.3 <"l !S...... 2. Net lending to Govt. + 29.0 + 0.6 + 134.1 + 1,283.2 - 2,013.0 - 699.2 V) Claims on Govt. + 56.0 + 148.5 + 706.9 + 1,643.0 + 1,984.6 4,585.4 ...... Less Govt. deposits + 27.0 + 147.9 + 572.8 + 359.8 + 3,997.6 5,284.6 s::: <"l ...... s::: 3. Net foreign assets + 94.0 + 229.1 + 382.7 + 1,524.4 + 5,303.0 8,863.4 ..... Official reserves + 329.0 + 285.7 + 579.3 + 1,793.3 + 5,228.6 8,975.7 (1) Commercial banks' - 235.0 - 56.6 + 196.6 - 268.9 + 74.4 - 112.3 '"~ - ~ 4. Other influences - 66.0 - 26.1 33.7 768.3 218.7 -1,167.2 0 ;::;: (1) 5. Private sector liquidity or ...... M2(l+2+3+4) + 351.0 + 802.9 + 1,606.4 + 5,870.7 + 11,636.9 21,638.3 I::> Less fixed, savings and other ~ deposits + 198.0 + 459.2 + 1,087.9 + 3,554.4 + 7,499.7 13,152.3 d' ...... -. 6. Money supply, MI + 153.0 + 343.7 + + 2,316.3 + 4,137.2 8,486.0 <"l 518.5 -.(1) ofwhich: Currency + 126.0 + 164.1 + 154.0 + 1,238.8 + 1,855.2 4,094.2 '"-.;:s Demand deposits + 27.0 + 179.6 + 364.5 + 1,077.5 + 2,282.0 4,391.8 Y:l Note: *Federation of Malaya only. !:l'1 Source: Bank Negara Malaysia, Annual Report, 1979, p. 57, and various issues; and Bank Negara Malaysia, Money and Banking ~ in Malaysia, Kuala Lumpur, 1979, p. 344. '"-.I::> TABLE 4.10 Balance of Paymellts and Changes in Currency, MI, M2 and M3 in Malaysia (M$ Million)
ChanKe ofcurrellcy ill ChanKe in MI ChangeinM2 ChangeinM3 Surplus or deficit (-) Endyear acth'e circlilation balance ofpayments (.:1 C') (.:1MI) (.:1M2) (.:1 M3) (.:1B)
1968 + 33.6 + 172.4 + 469.8 + 501.2 + 177 ....~ I:l 1969 +125.3 + 185.3 + 479.8 + 521.2 + 494 .... 1970 + 69.7 + 150.2 + 438.0 + 516.3 + 68 <;;. .... 1971 + 60.5 + 87.9 + 521.7 + 587.8 + 203 -. 1972 +208.7 + 595.1 + 965.0 +1179.7 + 389 2 1973 +448.7 +1019.7 +1952.1 +2222.0 + 576 - 1974 +311.6 + 320.1 +1215.5 +1437.1 + 452 ~ 1975 +210.0 + 293.5 +1251.9 +1484.1 + 171 "" 1976 +388.7 + 908.2 +2788.9 +3134.3 +2054 -~ 1977 +484.6 + 870.4 +2138.8 +2596.8 + 755 1978 +466.1 +1115.4 +2997.5 +3592.9 + 625 1979 +532.6 +1119.1 +4834.1 +2347.5 +1789
Source: Tables 4.6 and 4.7, and Bank Negara Malaysia, Quarterly Economic Bulletin, September, 1979, p.86. Annual Report, 1979, p.153 (for balance of payments).
0\N ....,J 1 IV TABLE 5.1 Bank Credits in Rupiah and Foreign Exchange by Groups 01 Banks 0\ (Rp Billion) 1973 1975 1977 1978 1979 I. Bank Indonesia (direct credit)2 153.83 895.33 1,234.94 1,934.90 2,163.05 :!! (14.5) (31.3) 465.83 (34.4) ;::: in Rupiah 153.83 246.45 370.41 465.83 2,163.05 ~ 3 ;::: in foreign exchange 648.88 864.53 1,469.07 ~ i::;' 2. State Commercial Bank and BAPINDO 744.70 1,601.87 2,266.67 2,831.82 3,287.84 "- (70.3) (57.5) (52.3) in Rupiah 697.71 1,397.19 2,058.18 2,548.51 2,975.31 ~ in foreign exchange 46.99 204.68 208.49 283.31 312.53 ~ ~ 3. National private Banks and local development banks 65.61 132.66 257.04 365.39 493.11 ~ (6.2) (6.5) 359.90 (7.8) ~ in Rupiah 65.49 131.20 254.18 359.90 466.23 ~ in foreign exchange 0.12 1.46 2.92 5.49 26.88 ~ 341.84 4. Foreign banks 95.11 122.28 183.49 262.08 ~ (9.0) (4.7) (5.4) ;::: in Rupiah 53.00 69.80 115.42 175.76 271.24 (1) in foreign exchange 42.11 68.07 86.32 70.60 52.48 qEi 5. Total 1,059.25 2,752.14 3,942.14 5,394.18 6,285.85 (100) (100) (100) in Rupiah4 970.03 1,844.64 2,798.12 3,549.99 5,875.84 "-~ in foreign exchange 89.22 907.50 1,144.02 1,844.19 410.01 ;:;. ~. Notes: Figures in parenthesis are percentages. 1. Outstanding credits, excluding inter-bank credits, credits to Government and to non-residents, specialliquidity credits, special S· credits and foreign exchange component of Project Aid. 2. Excludes liquidity credits, i.e. Bank Indonesia credits to banks. ~ 3. Includes credits to state oil enterprises for repayment of foreign borrowing. M 4. Includes investment credits, KIK and KMKP. ~ Source: Bank Indonesia, lndonesia Financial Statistics, May 1980, pp. 62-3; and c., Centra! Bureau of Statistics, Financial Statistics, 1977-8 and 1978-9, p. 75 i::;' TABLE 5.2 Bank Credits in Rupiah and Foreign Exchange by Economic Sec tors (Rp Billion) 1973 1975 1977 1978 1979 1. Trade 428.22 766.33 911.17 1,113.84 1,337.93 ~ I:) (40.4) (23.1 ) (21.3) .... E;. inRp 390.99 741.13 897.70 1,105.28 1,333.58 .... in foreign exchange 37.23 25.20 13.47 8.56 4.37 2 2. Manufacturing industries 277.65 718.78 1,156.16 1,624.25 1,961.04 - ~ (26.2) (29.3) (31.2) C)oo inRp 277.65 508.06 904.43 1,264.79 1,563.56 in foreign exchange 210.72 251.73 359.46 397.48 -~ 3. Mining 8.11 741.32 1,061.73 1,699.38 1,888.90 (0.8) (26.9) (30.0) in Rp 8.11 88.46 197.20 230.31 1,888.90 in foreign exchange 652.86 864.53 1,469.07 4. Agriculture 86.98 220.18 269.98 344.84 412.84 (8.2) (6.8) (6.6) in Rp 86.98 211.85 264.42 344.35 411.42 IV in foreign exchange 8.33 5.56 0.48 1.42 0\ \0 (continued on p.270) TABLE 5.2 (contd) N -.J o 1973 1975 1977 1978 1979 5. Service industry 78.95 171.65 319.16 388.56 435.74 ~ (7.5) (8.l) (6.9) ;:: in Rp 78.95 166.18 310.93 384.89 431.47 § in foreign exchange 5.47 8.23 3.67 4.27 (") ~. 6.0thers 179.35 133.87 223.93 223.32 249.42 ...... (16.9) (5.7) (4.0) V:i in Rp 246.94 127.36 128.96 223.43 220.37 ~ in foreign exchange 51.99 4.91 0.50 2.95 2.48 (") ..... $:;: 7. Total 1,059.26 2,752.14 3,942.14 5,394.18 6,285.85 (100) (100) (100) a in Rp 970.03 1,844.64 2,798.12 3,549.99 5,875.84 R<> in foreign exchange 89.23 907.50 1,144.Q2 1,844.19 410.01 ~ ;:: Note: 1 Bank credits inc1ude credits from Bank Indonesia, commercial banks and development banks. ~ Source: Bank Indonesia,Indonesia Financial Statistics, May 1980, pp. 60-1 ; and Central Bureau of Statistics, Jakarta, i:i Financial Statistics, 1978-9, p. 76, and Bank Indonesia, Weekly Report, September 1980, p. 15. ~ ~ ...... ;::;. ~. 5' ~ M ..,~ ~. TABLE 5.3 Consolidated Balance Sheet o[ Deposit Money Banks in IndonesÜl (Rp Billions) 1973 1975 1977 1978 1979 Liabilities: Capital and reserves 92.54 251.52 420.45 515.61 501.40 Deposits: Demand deposits 283.4 7 593.33 958.91 1,192.69 1,674.20 Time and savings deposits 234.95 596.10 983.93 1,054.07 1,146.31 Government deposits 39.46 83.93 171.01 217.69 411.90 Import deposits 115.67 78.62 146.19 173.84 213.18 CI) Foreign eurreney deposits 80.79 128.01 139.47 263.12 669.79 Ei ...... Foreign liabilities 253.11 253.85 275.31 443.64 430.66 t:;. Borrowings from Bank Indonesia 203.64 548.39 635.22 860.07 1,238.37 ...... Other liabilities 229.24 190.86 299.27 554.80 545.66 2...... Total assets / Iiabilities 1,532.86 2,724.59 4,029.77 5,275.55 6,831.46 ~ <:::t' Assets: ...... Cash and reserves with Central Bank 116.63 379.95 638.44 568.00 804.49 ~ Foreign assets 216.02 197.32 316.02 685.38 1,315.50 Claims on Central Government 0.34 0.03 0.45 0.73 52.68 Claims on official entities and publie enterprises 102.06 543.87 732.74 1,048.67 1,192.47 Loans to the private seetor 803.19 1,312.94 1,974.46 2,483.67 2,972.68 Other claims 119.47 49.21 61.60 88.22 142.42 Other assets 175.15 241.27 306.06 400.89 351.21 Note: Deposit money banks include eommercial banks and development banks. Source: Bank Indonesia, Illdollesiall Fillallcial Statistics, May 1980, pp. 28-9; N and Cenlral Bureau of Statistics, Jakarta, Mollthly Statistical Bulletill, January 1980, p. 100. -.l ..... 272 Financial Structures & Monetary Policies in S.E. Asia TABLE 5.4 Number of Banks and Financiallnstitutions in Indonesia, March 1979 Numberof Numberof banks offices 1. Central Bank 36 2. Deposit money banks: 2.1 Commercial banks 2.1.1 State commercial banks 5 687 2.1.2 Private commercial banks 78 274 2.1.3 Foreign commercial banks 2.1.3.1 Branches of foreign banks 10 19 2.1.3.2 Joint bank 1 1 2.1.4 Representative offices of foreign banks 48 2.2 Development banks 2.2.1 State development banks 1 11 2.2.2 Regional development banks 26 144 2.2.3 Private development bank 1 1 3. Finance corporations 3.1 Development finance corporations 3 3 3.2 Investment finance corporations 9 9 4. Savings banks 4.1 State savings banks 1 8 4.2 Private savings banks 4 4 140 1,245 5. Other secondary banks 5.1 Petty traders' banks 152 152 5.2 Village banks 3,564 3,564 5.3 Paddy banks 2,154 2,154 5,870 5,870 Source: Bank Indonesia,Report ofthe Financial Year, 1978/79 pp. 33-4;and 'Bank Directory, Economic and Financial Statistics of Indonesia', presented by Indonesian Representatives to Asean Banking Council, Jakarta, February 1979. TABLE 5.5 State Bank Lending Rates and Percentages of Rejinancing Facilities provided by Bank Indonesia, as from January 1978 Bank Rediscount Percentage of loan lending rates rejinanciable by rates (per cent) Bank Indonesia (per cent) Short·term credits Category I, paddy and corn by KUDs/BUUDs (co operatives) 9 3 100 Category 11, BIMAS credits, agricultural products 12 75/100 ~ handicraft and export goods * .... Category III, manufacturing and service industries 13.5 6 70 0;;. .... Category IV, contractors 15 6 60 -. Category V, other import goods 18 6 40 2 Category VI, others, n.i.e. 21 6 25 - ~ Investment credits <::l'"' -~ Category I 10.5 3 80 Category 11 12 4 75 Category III 13.5 4 70 Category IV 13.5 4 65 Small Investment Credits (KIK) 10.5 3 80 Permanent Working Capital Credit (KMKP) 12 4 75 Source: Bank Indonesia, Report of the Financial Year, 1977/78, p. 16. For detailed definitions of different categories, see Table 5 of that page. N -.l W 274 Financial Structures & Monetary Policies in S.E. Asia TADLE 5.6 Interest Rates on Deposits Since Since Since Fixed deposits Jan.1978 Jan.1977 Dec.1974 (months) (per cent) (per cent) (per cent) 3 * 3 6 3 * 6 9 6 6 9 12 12 9 12 15 18 21 24 15 18 24 (Up to Rp. 2.5 millions) 12 (excess over Rp. 2.5 million) * As determined by depository banks TADLE 5.7 Otrrency, Demand Depositll and Quasi-money in Indonesia, 1966-80 (Rp Billions) Endyear Otrrency in active Demand Quasi-Money* circulation deposits 1966 14.36 7.85 1967 34.10 17.37 1968 74.68 39.21 1969 115.70 67.74 1970 154.62 95_67 1971 199.36 121.40 148_10 1972 271.77 202.84 220.40 1973 374.97 294.03 318.44 1974 494.23 443.29 514.72 1975 623.34 624.75 728.02 1976 781.01 821.95 1,028.29 1977 979.09 1,027.30 1,124.78 1978 1,239.93 1,248.41 1,320.40 1979 1,545.45 1,833.10 1,843.07 1980 March 1,736.20 2,023.19 2,005.78 * Quasi-money includes time and savings deposits of commercial banks, and development banks. Source: Bank Indonesia,lndonesian Financial Statistics, May 1980, p. 31 ; and Bank Indonesia, Weekly Report. September 1980, p. 10. TABLE 5.8 Money/lncome Ratios oflndonesia. 1966-79 (Rp Billions) GNP at current MI/GNP M2/GNP TD/GNP Endyear MI M2 market prices ratio ratio ratio 1966 22.21 311.0 0.07 1967 51.47 838.2 0.06 1968 113.89 2,067.8 0.06 1969 183.44 2,683.4 ~ 0.07 ...... 1970 250.29 3,289.9 0.08 Ö:;• 1971 320.76 468.86 3,605.3 0.09 0.13 0.04 -...... 1972 474.61 695.01 4,404.6 0.11 0.16 0.05 2"- 1973 669.00 987.44 6,753.0 0.10 0.15 0.05 1974 937.52 1,452.24 10,708.0 0.09 0.14 0.05 ~ 1975 1,250.09 1,978.11 12,643.0 0.10 0.16 0.06 "-c::T' 1976 1,602.96 2,631.25 15,467.0 0.1 0 0.17 0.07 ~ 1977 2,006.39 3,131.17 19,011.0 0.11 0.16 0.05 1978 2,488.34 3,808.74 21,967.0 0.11 0.17 0.06 1979 3,378.55 5,221.62 30,661.0 0.11 0.17 0.06 Note: TD = time and savings deposits or quasi-money. Source: Table 5.7; and Central Bureau of Statistics, Jakarta, Main Tables of the National Income of 1ndonesia. 1973-1978. Table III: IMF,lntemational Financial Statistics, Feb. 1981; and World Bank, Wor/d Tab/es, 1976, p. 123. N-l VI N -.l 0\ TABLE 5.9 Ozanges in MI, M2, GNP at Otrrent and Constant Prices and Cost of Living Index in Jakarta Endyear Ozange OIange Change in GNP at constant Change Cost 01 living Change in MI inM2 GNP at current (1973) prices index in ~ market prices (Sept. 1966=100) $::l ~ (per cent) (per cent) (per cent) (Rp Billion) (per cent) (per cent) ("') ~ ...... 3,965.5 76 1966 V:l 1967 +131.7 +169.5 4,020.6 +1.4 206 +171.1 ..... 1968 +121.3 +146.7 4,458.9 +10.9 464 +125.2 :::! ("') 1969 +61.1 + 29.8 4,764.4 +6.9 545 + 17.5 ..... 1970 + 36.4 + 22.6 5,123.8 +7.5 612 + 12.3 ~ 1971 + 28.2 + 9.6 5,465.0 +6.7 639 + 4.4 ~ + 1972 + 48.0 +48.2 + 22.2 5,896.2 +7.9 680 6.4 R<> 1973 + 41.0 +42.1 + 53.3 6,507.7 +10.4 891 + 31.0 ~ 1974 + 40.1 +47.1 + 58.6 6,900.0 +6.0 1253 + 40.6 0 1975 + 33.3 +36.2 + 18.1 7,270.5 +5.4 1492 + 19.1 ~ 1976 + 28.2 +33.0 + 22.3 7,789.8 +7.1 1788 + 19.8 CI:> 1977 + 25.2 +19.0 + 22.9 8,379.0 +7.6 1985 + 11.0 Ei 1978 + 26.9 +16.2 + 15.5 8,982.0 +7.2 2234 + 12.5 ~ 1979 + 35.8 +37.1 + 39.6 +6.5 + 27.7* cl' 1980 +7.0f "- -.("') * According to the new consumer price index for 17 eities, the cost of living index was increased by 27.7 per cent in 1979. ~~ f = forecast -.~ Source; Tab1e 5.8; Central Bureau of Statistics, Jakarta, Main Tables 01 the NationalIncome olIndonesia 1973-1978, Y:l Table IV; IMF ,International Financial Statistics, Nov. 1980; World Bank, World Tables, 1976, p. 123; and Central Bureau ):l1 of Statistics, Jakarta, Monthly Statistical Bulletin, September 1980 (for cost of Iiving index in Jakarta). :A- t., ~. TABLE 6.1 Assets and Liabilities of Commercial Banks in Thailand, 1966-79 (Bah ts Million) 1967 1970 1973 1976 1979 Liabilities: Capital accounts 1,932 3,094 5,143 10,166 18,225 Deposits: 20,589 31,885 58,372 106,418 175,625 Demand deposits 6,174 7,599 11 ,725 16,780 25,428 Time deposits 11,867 20,931 40,741 78,945 129,364 Savings deposits 2,195 2,934 5,036 9,518 18,159 Others 352 421 850 1,176 2,674 Borrowings from: V:l Bank of Thailand 299 787 2,882 5,530 16,733 i:::' Other banks of Thailand 14 8 260 660 828 .... 1;;' Banks abroad 2,564 3,208 6,899 9,205 35,422 .... Other liabilities 1,533 2,360 4,804 7,652 12,898 .....2 Total assets/liabilities 26,930 41,187 78,362 139,631 259,731 ~ Assets: .....c::J- Cash in hand + balance at BOT 1,692 2,443 3,622 6,272 7,590 ~ Inter·bank balance 9 44 49 3,480 8,561 Balance in banks abroad 773 1,446 3,142 3,053 6,735 Foreign currencies and gold 22 23 59 99 304 Treasury bills 515 213 352 2,484 81 Govcrnment securitics 4,344 5,684 14,645 18,427 23,781 Other invcstments* 256 412 730 2,793 3,037 Loans, overdraft and discounts 17,258 28,194 51,184 95,145 195,072 Fixed and other assets 1,910 2,680 4,276 7,194 12,973 * Other investments inelude private sccurities (domestic and foreign) and IFCT shares and debentures. Souree: Bank of Thailand, Allllua/ ECO/IOI/lic Report, 1978, Statistical Section, pp. 9 and 10; and Bank of Thailand, Month/y Bulletin, N Apri! 1980, pp. 8-9 ..-J ..-J IV -.J TABLE 6.2 Composition oi Bank Lending (Loans, Overdraits and Trade Bills) oi Thailand, 1972-9 00 (Bahts Million) 1972 1975 1977 1979 ~ ~ 1. General commerce (imports, exports l::l ~ wholesale and retail trade) 17,806 (49.7) 38,834 56,834 96,053 (48.4) ("') $5'-.. 2. 5,687 (15.9) 34,299 (17.3) Manufacturing 16,478 23,846 V:l 3. Agriculture 771 ( 2.1) 2,824 6,341 10,775 ( 5.4) ~ ....("') :::: 4. Mining 419 ( 1.1) 608 668 1,252 ( 0.6) ~ ~ 5. Construction and real estate business 3,999 (11.2) 7,207 9,846 16,189 ( 8.2) R<> ~ 6. Banking and other financial institutions 1,606 ( 4.5) 5,386 7,017 12,475 ( 6.3) 0 ~ ~ 7. Pu blic u tilities and other services 2,462 ( 6.9) 4,462 8,057 11,416 ( 5.8) ;::;- q 8. Personal consumption 3,086 ( 8.6) 7,047 10,156 15,745 ( 7.9) ~ 9. Others 10 52 45 159 .....-...... ("') ~ Total 35,846 (100) 82,899 122,810 198,363 (100) .....'" ~ Index 100 231 343 553 ~ Note: Figures in parenthesis are percentages. ~ Source: Bank of Thailand, Annual Economic Report, 1978, Statistical Section, p. 13; and Monthly Bulletin, April 1980, p.16. ~ ..... '"l::l TABLE 6.3 Structure ofIllterest Rates ill Thailalld (at end period) 1974 1976 1978 1979 1980, March A. Bank of Thailand Loan rate 11 9 12.5 12.5/15 14/17.5 V:l Rediscount rates on export bills, agricultural .... I:l bills and bills arising from industrial and .... agricultural undertakings 5 5 5 5 5 1;;. ....-. B. Commercial bankst 2-.. 'Call money' rate 11.3 7.7 12.0 14.76 16.78 ~ Loans and overdrafts: t:l" Loans tor exports 15 15 15 15 15 -.. Loans for industries 12.5 12.5 12.5 15 12.5 ~ Others 15 15 15 15 15 Discount rates on: Export bills and commercial bills Bills on (i) industria1 raw materials 15 15 15 15 18 and (ii) sales on credit of industrial products 10.5 12.5 12.5 15 18 Export bills *, and bills arising from industrial and agricultural undertakings* 7 7 7 7 7 N Agricultural bills* 10 10 10 10 10 -.) \D (continued on p.280) TABLE 6.3 (contd) N 00o 1974 1976 1978 1979 1980, March Deposits Demand deposits 0.01 0.01 0.01 ~ Savings deposits i5 4.5 4.5 4.5 5.5 8 ;:$ Time deposits: C":> less than 3 months 0.01 0.01 0.01 ....S· 3-6 months 6 6 6 6 9 CI:) 6-12 months 7 7 7 7 10 12 months and over 8 8 8 9 12/14 ~ C":> Foreign currency deposits 12 12 12 12 float ~ ~ C. Government bonds 8.5 8.5 8.5-9.25 9.5-10.25 9.5-13.25 R<> Treasury bills (average tender rate) 5.14 5.76 7.20 7.58 8.45 ~ Note: 1. All except the 'call money' rate are maximum rates. ;:$ t (';) 2. * Applicable to bills rediscounted at the Bank of Thailand. 3. Interest rates of time and savings deposits for Government Savings Bank, Bank of Agriculture and Agricultural Co-operatives, ~ and Government Housing Bank are alm ost identical. ~ Source: Bank of Thailand, Statistical Bulletin, September 1979, pp. 30-1; andMonthly Bulletin, April 1980, pp. 26-7. ....~ ;::;. ~. S· ~ ~ ::t:. S·'" TABLE 6.4 Money, Quasi-money and Net Deposits of Non-bank Financial Institutions in Thailand (Bahts Million) End 04rrency Demand deposits Quasi-money Net deposits of non·bank financial period (held by (held by public) institutions public) Time Savings Other Total Bankof Govt. deposits deposits Agriculture and Savings Total Agricultural Bankt Cooperatives* ]965 8,]25 4,792 6,937 ],377 285 8,599 45 2,235 2,280 ]966 9,3] 7 5,286 9,459 2,010 3]6 11,785 35 2,78] 2,8]6 ]967 9,824 5,882 11,869 2,195 352 ]4,416 52 3,388 3,440 ~ ]968 ]0,641 6,645 14,309 2,486 404 ] 7,] 99 ]00 3,864 3,964 .... ~. ]969 ]0,950 7,039 ] 7 ,283 2,794 486 20,563 ]3] 4,240 4,37] .... ]970 ]] ,864 7,584 20,93] 2,934 42] 24,286 ]68 4,598 4,766 -. ]97] 13,053 8,393 25,77] 3,201 517 29,489 210 5,]83 5,393 ~ ]972 15,279 9,552 33,293 4,054 633 37,980 292 6,546 6,838 - ~ ]973 18,645 11 ,29] 40,74] 5,056 850 46,647 359 8,433 8,792 I:;r 1974 20,450 12,758 52,063 6,608 ],195 59,866 651 9,758 10,409 1975 22,271 ] 2,711 63,893 7,677 968 72,538 1,] 75 10,363 ] 1,538 -~ ]976 25,775 ]4,852 78,944 9,518 1,] 76 89,638 1,362 11,559 12,921 1977 28,567 ]5,729 99,272 ] 1,121 ],590 ]]] ,983 1,758 ]4,023 15,781 1978 33,042 19,864 117,770 ]4,962 2).72 135,004 ] ,995 ]5,363 17,358 1979 40,703 20,545 129,364 18,159 2,674 150,197 2,019 19,148 21,167 ]980, March 42,489 25,769 134,559 20,] 30 2,965 157,654 1,990 20,602 22,592 Note: Quasi-money refers to time and savings deposits of commercial banks. * Includes time and savings deposits and loan compensatory deposits, but exc1udes deposits from commercial banks. t Inc1udes demand, time and savings deposits of private sector. N Source: Bank of Thailand, Annual Economic Report, 1977, Statistical Section, pp.7, ]0, 15 and 16; and Monthly Bulletin, Apri11980. 00 ...... N TABLE 6.5 MI, M2, M3, and Money/GNP Ratios ofThailand, 1965-80 00 (Bahts Million) N End GNP MI/GNP M2/GNP TD/GNPt year MI M2 M3 at current prices ratio ratio ratio M3/GNP ~ ~ I::l 1965 12,917 21,516 23,796 84,300* 0.15 0.26 0.11 0.28 ~ (") 1966 14,657 26,442 29,258 101,400* 0.15 0.26 0.11 0.29 ~. 1967 15,706 30,122 33,562 108,500* 0.15 0.28 0.13 0.31 1968 17,286 34,485 38,449 117,000* 0.15 0.30 0.15 0.33 -V) 1969 17,989 38,552 42,923 128,792* 0.14 0.30 0.16 0.33 ~ ~ (") 1970 19,448 43,734 48,500 136,328* 0.14 0.32 0.18 0.36 .... 1971 21,446 50,935 56,328 144,590* 0.15 0.35 0.20 0.39 ~ 1972 24,831 62,811 69,649 164,299 0.16 0.41 0.25 0.42 ~ 1973 29,936 76,583 85,375 216,119 0.14 0.35 0.21 0.40 '" 1974 33,208 93,074 103,483 272,166 0.12 0.34 0.22 0.38 Ro 1975 34,982 107,520 119,058 298,816 0.12 0.36 0.24 0.40 1976 40,627 130,366 143,287 336,374 0.12 0.39 0.27 0.43 ~ ~ 1977 44,296 156,280 172,061 391,016 0.11 0.40 0.29 0.44 nl 1978 52,906 187,910 205,268 473,629 0.11 0.40 0.29 0.43 ~ 1979 61,248 211,445 232,612 556,779 0.11 0.39 0.28 0.42 q 1980, March 68,258 225,912 248,504 ~ .... Note: * Those figures are taken from the Office of the National Economic Development Board: National Income ofThailand, 1972. (") -~. Strictly speaking, they are not comparable with the figures in subsequent years, because apparently the Office had changed the system of estimation. '"S· t TD = time and savings deposits of commercial banks. Source: Table 6.2 for MI, M2, and M3. GNP figures are taken from National Accounts Divison, Office of the National Economic and ~ Social Development Committee, as reported in the Bank of Thailand, Monthly Bulletin, April 1980, p.1 05; and IMF ,International ]:"t"J Financial Statistics, JuIy 1980. ~ ~.'" TABLE 6.6 Percentage Changes in MI, M2, M3, GNP, Consumer Prices and Balance of Payments, 1966-79 GNPat GNPat Average Balance current constant Change consumer Change ofpayments MI M2 M3 prices prices price (B Million) (per cent) (per cent) (per cent) (per cent) (B Billion) (per cent) index (per cent) (Oct. 1964 to Sept. 1965:: 100) ]966 13.4 22.9 23.0 ]04.4 + 4.0 + 3,304 ]967 7.] 13.9 ]4.7 7:0 96.2* 7.8 ]08.9 + 4.3 + ] ,303 CI:) i::l' ]968 ]0.1 ]4.5 ]4.6 7.8 ]04.4* 8.5 ] 10.9 + 1.8 + 449 .... 1969 4.1 11.8 11.6 10.1 112.2* 7.5 ~. 113.6 + 2.4 914 .... 1970 8.1 13.4 13.0 5.9 119.7* 6.7 113.5 - 0.1 - 2,652 -.r" 1971 10.3 16.5 16.1 6.1 127.1 * 6.2 114.0 + 0.4 335 .....~ 1972 15.8 23.3 23.7 6.6 132.7* 4.4 119.6 + 4.9 + 3,991 1973 20.6 21.9 22.6 31.5 143.5* 8.1 138.1 +15.5 + 864 ~ 179.8t .....~ 1974 10.9 21.5 21.2 25.9 190M 6.0 171.7 +24.3 + 8,012 <"1:> 1975 5.3 15.5 15.1 9.8 203.3t 6.7 180.8 + 5.3 - 2,858 '" 1976 16.4 21.3 20.4 12.6 221.5t 8.9 188.4 + 4.2 83 1977 8.8 19.9 20.1 16.2 237.3t 7.1 201.9 + 7.2 - 7,538 1978 19.4 20.2 19.3 21.1 264.1 t 11.3 218.8 + 8.4 -13,298 1979 15.8 12.5 13.3 17.6 279.3t 5.8 240.5 + 9.9 - 7,925 Note: 1. Change:: percentage change from the previous year. 2. * GNP at constant (l962) prices. t GNP at constant (1972) prices. Source: Table 6.4; Bank of Thailand. Monthly Bulletin, April 1980; and World Tables, 1976, pp. 228-9. IV 00 W N 00 +:>. ;] ;:s I::l ;:s (') ~ . .... TABLE 7.1 Structure of the Philippine Financial Institutions and their Relative Assets ~ (') Number.1978 Numberof Assetsas at .... offices, 1978 end 1977 Per cent distribution ~ (Million Pesos) ~ Financial system: 2,253 4,309 157,128.2 100 Rt> 1. Monetary system 97,996.9 62.4 A. Monetary au thorities 28,621.8 18.2 o~ B. Deposit money b.anks 69,375.1 44.2 ;:s 1. Commercial banks 32 1,286 68,676.5 43.7 (1) 2. Rural banks with demand deposits * * 698.6 0.5 q~ 11. Non·monetary financial system 59,131.3 37.0 A. Banking institutions 25,776.2 16.4 ~ 1. Thrift banks .... 4,080.0 2.6 ;::;. (a) Savings banks 10 207 2,810.4 1.8 (b) Private development banks 36 140 595.5 0.4 ~. (c) Stock Savings & Loan Assn 72 162 674.1 0.4 2. Rural banks 931* 1029* 2,628.9 1.7 5' 3. Specialised banks 19,067.3 12.7 Yl (a) Development Bank of 58 15,805.7 10.0 Philippines M (b) Land Bank 14 3,193.9 2.0 A (c) Philippine Amanah Bank 9 67,7 0.1 ""~. T ABLE 7.1 (contd) Number, 1978 Numberof Assets as at offices, 1978 end 1977 Per cent distribution (Million Pesos) B. Non-bank tinancial institutions 33,355.1 21.1 I. Finance companies 250 400 5,852.3 3.7 2. Investment houses 12 56 4,746.7 3.0 3. Investment companies 59 59 2,950.3 1.9 4. Securities dealers/brokers 128 128 978.4 0.6 5. Fund managers 9 9 552.4 0.4 6. Non-5tock Savings & Loan 70 70 143.5 0.1 Assn 7. Mutual Building & Loan Assn 7 7 23.2 ....~ 8. Private insurance companiest 148 140 5,230.1 t 1::0 3.3 .... 9. Lending investors 34 35 16.2 C:;. 10. Spedalised tinancial .... institutions: 12,684.2 8.1 -. (a) Govemment service 6,751.4 4.3 "-2 Insurance System (GSIS) (b) Social Security System 4,539.7 2.9 ~ (SSS) "-~ (c) Agricultural Credit ("1) Administration (ACA) 421.1 0.3 '" (d) National Investment and Development Corporation (NIDC) I I 972.0 0.6 II . Pawnshops 448 496 177.8 0.1 Notes: ).. Some rural banks accept demand deposits, whiist others do not. The total number ofrural banks was 931 in 1978. 2. tUnder the new concept of 'non-bank finandal institutions' , private insurance companies and pawnshops were excluded. Figures refer to assets of private insurance companies as at end 1976. Source: central Bank of the Philippines,Annual Report, 1978, p. 92; Fact Book: Phl/ippine Financial System, Ist Qr. 1978, pp. 2 and 27; and other information from the Central Bank and various banks and financial institu tions. N 00 Vl N 00 0\ TABLE 7.2 Assets and Liabilities 01 Commercial Banks in the Philippines. 1949-78 (Pesos Million) ~ 1949 1966 1973 1976 1978 ;:! $:l ;:! Liabilities: <"':> ~ 746 939.6 2,893.2 5,175.5 8,008.4 Capital and reserve ~ Demand deposit 455.0 1,521.4 5,276.2 6,664.8 9,602.3 Time deposit 29.0 1,215.2 3,044.2 5,130.7 16,736.5 2 Savings deposit 248.9 1,925.4 6,865.4 8,951.2 17,313.7 <"':>.... Balance due to banks 70.3 208.7 1,407.2 2,426.1 763.0 ~ Bills payable 953.9 5,830.5 18,209.5 21,735.4 ~ '" Other liabilities 131.0 867.1 4,252.1 6,615.0 15,639.3 R<> ~ Total assets/liabilities 1,008.8 7,631.3 29,940.3 59,367.2 89,798.6 0 ;:! Assets: ~ ~ Cash and cash items 59.1 315.0 1,411.4 2,184.3 2,304.5 ~ Balance with Central Bank 110.3 178.0 1,895.2 2,504.5 3,819.8 ~ Balance due from banks 160.4 398.9 2,282.2 4,309.9 4,903.5 -. Investments 53.2 826.3 4,426.9 7,217.4 11,370.2 --.<"':> ~ Loans, overdrafts and discount 453.1 4,330.2 14,392.5 31,666.2 48,896.7 Other assets 172.7 1,582.9 5,532.1 11,485.3 18,503.9 S·'" ~ Source: 'Statements of Condition of Commercial Banks', as presented in the Central Bank of the Philippines, Annual Report, 1978, Statistical Bulletin, p. 106. M ::t:.. '"$S. TABLE 7.3 [oans granted by Commercial Banks. Saving Banks and Development Banks to Different Economic Sec tors (Pesos million) 1978.30 1960 1977* 1965 1973 V:J Sept. t i:3' ..... C;;. I. Trade 1,077.5 3,019.0 22,380.2 21,946.2 13,750.0 ...... (37.6) (38.0) ( 48.5) (20.4) (29.1 ) r:. ~ ...... 3,160.8 2. Services 41.2 88.1 595.1 2,832.4 ~ (1.4) (1.1) (1.3) (2.6) (6.7) ~ ...... ~ 3. Banks and other financial institutions 71.9 651.2 5,777.2 39,892.6 2,532.0 "" (2.5) (8.2) 02.5) (37.0) (5.4) 4. Real estate 43.4 145.0 977.1 1,588.7 2,198.0 ( 1.5) ( 1.8) (2.1) (I.5) (4.7) 5. Manufacturing 886.2 2,322.2 10,447.5 27,475.1 15,243.0 (30.9) (29.3) (22.6) (25.5) (32.3) 1,694.0 6. Mining and quarrying 36.7 51.4 836.0 2,844.0 N (I.3) (0.7) (I.8) (2.6) (3.6) 00 -.l (continued on p.288) TABLE 7.3 (contd) IV 1978,30 00 1960 1965 1973 1977* Sept. 00 3l 7. Construction 45.9 143.5 368.8 1,269.4 1,238.2 ;:s (1.6) (1.7) (0.8) (1.1) (2.6) I:l ;:s ~ 8. Public utility 65.1 157.1 871.3 2,066.1 1,476.9 [ (2.3) (2.0) (1.9) (1.9) (3.1) V:l 9. Agriculture, fishery and forestry 502.7 1,210.3 2,988.6 6,216.0 4,933.0 2 ~ (17.5) (15.3) (6.5) (5.8) (10.6) i: 10. Consumption 98.0 147.0 937.0 1,756.6 902.1 ~ (3.4) (1.9) (2.0) (1.6) (1.9) ~ Total 2,868.6 7,934.8 46,178.8 107,887.1 47,188.0 ~ (100) (100) (100) (100) (100) ;:s ~ Note: 1. * January-August 1977 for commercial banks and savings banks only. q~ 2. t For commercial banks only. 3. Figures in parenthesis are percentages d' Source: Information kindly provided by the Central Bank of the Philippines; and Central Bank of the Philippines, Annual Report, ;::;. 1978,p.15. - ni· Si·'" ~ M ~ '"$S. TABLE 7.4 Money Supply, and Quasi-money of Deposit Money Banks in the Philippines, 1966-79 (Pesos Million) CUrrency Quasi-money Time and savings End in active Demand depositsof period circulation deposits* Total Time Saving Deposit Marginal other financial deposits deposits substitutes deposits institutionst 1966 1,543.4 1,673.9 3,367.8 1,202.1 1,967.8 197.9 341.6 1967 1,755.7 1,868.2 4,300.2 1,416.1 2,505.9 378.2 528.8 1968 1,777.5 2,019.3 4,909.5 1,280.9 2,820.9 807.7 619.9 V:l 1969 2,119.1 2,372.8 5,007.6 1,261.5 3,193.6 552.5 761.8 S ..... 1970 2,410.0 2,286.6 5,875.0 1,309.4 3,776.7 788.9 916.6 ~. 1971 2,650.0 2,529.1 6,690.9 1,381.8 4,302.8 1,006.3 1,139.6 ..... (")-. 1972 3,434.6 3,034.9 6,752.0 1,316.1 4,391.3 1,044.6 ] ,256.5 I::l 1973 3,452.4 3,814.8 12,726.6 996.5 5,757.9 4,041.4 1,930.8 1,720.7 ..... 1974 4,31] .1 4,696.7 17,015.6 1,090.2 6,674.3 7,469.8 1,781.3 2,334.6 ~ 1975 4,748.8 5,566.0 20,430.9 1,644.3 7,295.0 9,631.7 1,859.9 3,928.6 .....\:J" ~ 1976 5,651.8 6,423.1 25,834.6 3,742.7 9,207.1 10,872.7 2,012.1 5,920.1 v.. 1977 6,727.6 8,210.9 31,215.1 6,057.0 11 ,536.1 11 ,399.5 2,222.5 6,686.] 1978 8,135.0 8,810.5 37,729.0 8,387.0 15,010.7 ] 1,494.0 2,837.0 8,610.7 1979 9,182.0 9,662.0 4] ,661.0 9,666.0 16,900.0 11 ,951.0 3,]44.0 10,552.4 1980, March 8,705.0 10,980.0 * lnclude demand deposits of commercial banks and rural banks accepting demand deposits. t Inc1ude time and savings deposits of savings banks, development banks and savings and loans associations. Source: 'Statements of Condition of the Central Bank, Commercial Banks and Rural Banks', as reported in Central Bank of Philippines, Statistical Bulletin, Vol. XXX, ] 978, pp. 28-9; and Central Bank of the Philippines, PhiIippine Financial Statistics. Quarterly Bulletin, December 1979, pp. 14, ] 7,39,40 and 42. IV 00 \0 N TABLE 7.5 MI, M2, M3, GNP at Current and Constant Prices and Consumer Price Index o[ the Philippines, 1966-9 \0 (Pesos Million) 0 Growth Consumer MI M2 M3 GNPat rate o[ GNPat price index ~ current GNPat M1/GNP M2/GNP M3/GNP constant Growth [ar whole I::l prices current ratio ratio ratio (1972) rate country ~ (") prices prices (per cent) (1972 = 100) ..... I::l (per cent) ...... (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) ~ ~ $:: (") 1966 3,217.3 6,585.1 6,926.7 24,323* 0.13 0.27 0.28 41,189 62.4 ...... 1967 3,623.9 7,924.1 8,452.9 27,219* 11.9* 0.13 0.29 0.31 43,709 6.1 66.5 $:: 1968 3,796.8 8,706.3 9,326.2 31,791 10.7 0.12 0.27 0.29 45,540 4.2 69.8 c.,~ 1969 4,491.9 9,499.5 10,261.3 35,012 10.1 0.13 0.27 0.29 47,967 5.3 73.0 1970 4,696.6 10,571.6 11,488.2 41,751 19.3 0.11 0.25 0.28 50,035 4.3 83.4 Rt> 1971 5,179.1 11,870.0 13,009.6 49,599 18.8 0.10 0.24 0.26 52,921 5.8 93.7 ~ 1972 6,469.5 13,221.5 14,478.0 55,526 12.0 0.12 0.24 0.26 55,526 4.9 100. ~ 1973 7,267.2 19,993.8 21,714.5 71,616 29.0 0.10 0.28 0.30 60,881 9.6 116.5 (\) 1974 9,007.8 26,023.4 28,358.0 99,948 40.0 0.09 0.26 0.28 64,739 6.3 156.3 Ei 1975 10,314.8 30,745.7 34,674.3 114,260 14.4 0.09 0.27 0.30 68,561 5.9 166.9 ~ 1976 12,074.9 37,909.5 43,829.6 132,710 16.1 0.09 0.29 0.33 72,718 6.1 189.6 cl' 1977 14,938.6 46,153.6 52,839.7 154,080 16.1 0.10 0.30 0.34 77,279 6.3 209.3 ...... 1978 16,945.5 56,674.5 65,285.2 175,780 14.1 0.10 0.32 0.37 82,163 6.3 223.5 (")..... 1979 18,844.0 60,505.0 71,057.4 215,660 22.7 0.09 0.28 0.33 86,911 5.8 271.5 ~ 1980, March 19,685.0 ..... ~ *Adjustment from GDP in purchasers' value-see UN, Yearbook o[ National Accounts Statistics, 1975, Vol. ii, p. 314. ~ Source: Central Bank of the Philippines, Statistical Bulletin, Vol.XXX., 1978 pp. 28-30; Central Bank of the Philippines, Ph!lippines ~ Financial Statistics, Quarterly Bulletin, December 1979, p. 14; National Economic and Development Authority and National Census and ~ Statistics Office, Philippine Yearbook, 1979, p. 906; and IMF International Financial Statistics, August 1980. c., ~. TABLE 8.1 GNP per Capita and Economic Structures 01 ASEAN and Hang Kong, 1979 GNP,1979 Percapita GNP Average 'real' Average 'real' Percentage distribu tion of GDP (US $ Mn) (US $) growth rate growth rate 1967-73 1974-9 Agriculture lndustrial Service sec tor [isheryand sec tor (commerce in (per cent) (per cent) forest;y (manufac· brackets) turing in brackets) Singapore 9,009 3,817 12.9 7.3 1.4 31.9 (23.5) 66.7 (26.5) Malaysia 18,616 1,400 9.1 (Av.l971-73) 7.1 25 28 (19) 47 Indonesia 32,970 222 7.4 6.6 31.1 32.sl(9.3) 36.1 (31.4) Thailand 27,268 591 7.0 7.6 25.8 28.3 (19.3) 45.9 (20) Philippines 29,232 613 5.7 6.1 27.3 34.8 (24.6) 38 (22.1) V::i ~ ...... Total Asean 117,095 Av. = 454 Av. (weighted by Av. (weighted <;;...... GNP, 1973) by GNP, 1979) ;::;. = 7.6 per cent = 6.8 per cent ....I:l Hong Kong 17,610 3,594 9.1 9.0 1.4 30 (24) 68.8 (24.0) ~ CJ- TOTAL (six countries) 134,705 AV.=512 Av. = 7.8 per cent Av. = 7.1 per cent ~ Source and Notes: Tab1es 3.10, 3.11,4.7,4.8,5.7,5.8,6.5,6.6 and 7.5. IMF,lnternational Fillancial Statistics, August 1980. Census and Statistics Department, The 1980-81 Budgets: Estimates of Gross Domestic Product, 1966-78, Hong Kong, 1980. The percentage distribution of GDP is based on ) 979 data for Singapore and Thailand, ) 978 data for Malaysia, Indonesia, and Philippines, and 1977 data for Hong Kong. See Ministry of Finance, Singapore. Economic Survey of Singapore, 1979, p. 12; Bank Negara Malaysia, Money and Banking in Malaysia, 1979, p.7; Biro Pusat Statistik, lakartaMain Tables ofthe Nationallncome of lndonesia, 1973-1978 luly 1978 Table V; Bank of Thailand, Monthly Bulletin, Apri11980. Bank of Thailand Monthly Bulletin, Apri11980, and NEDA and National Census and Statistics Offioe, Philippine Year book, 1979, p. 908. The industrial sector includes manufacturing, mining and quarrying, construction, e1ectricity, gas and water. The service sector includes N commerce, transport, communication and storage, financial and other services. \0 292 Financial Structures & Monetary Policies in S.E. Asia TABLE 8.2 Total Assets of Commercial Banks in Asean Countries, os at end 1978 Total assets Number Numberof (US $ Million) of offices/ banks branches Singapore1 Domest~c 8,597.7(27) 13 142 Foreign 23,489.0(73) 37 108 32,086.7 50 250 Malaysia1 Domestic 7,055.9(59) 20 362 Foreign 4,839.3(41) 17 147 11,895.2 37 509 Indonesia Domestic 7,274.8(90) 683 964 Foreign 811.0(10) 11 20 8,085.8 79 984 Thailand Domestic 11,456.8(94) 16 1,296 Foreign 728.3 (6) 14 20 12,185.1 30 1,316 Philippines Domestic 10,896.2(88) 28 1,210 Foreign 1,505.6(12) 4 9 12,401.8 32 1,219 Total 76,654.6 145 + 83 4,278 = 228 Note: 1. Total assets inc1ude 'Liabilities of customers for acceptances, guarantees and other obligations' of commercial banks in Malaysia and Singapore, with contra account (in equal amount) under liabilities amounting to: Malaysia - $2,320.8 million Singapore - $11,886.1 million 2. Exc1uding 27 offshore banks. 3. There were in fact 84 domestic banks in Indonesia, but the reports of 16 small banks were unavailable; their assets were, however, not significant. 4. Figures in brackets are percentages. Source: SGV Group, A Study of Commercial Banks in the Asean Countries, 1978, pp. Band A2. TAßLE 8.3 Shares of Loans and Deposits of Domestic and Foreign Banks and their Loan/Deposit Ratios in ASEAN Countries, as at end 1978 Totalloans Share of domestic Share of Total Share of Share of Loan/deposit (US $ Million) banks foreign banks deposits domestic banks foreign ratio (per cent) (per cent) (US $ Million) (per cent) banks (per cent) Singapore1 8,537.5 37 63 15,850.3 31 69 0.54 (22.6) (37.4) Malaysia 5,472.7 55 45 7,956.4 65 35 0.69 V:l ~ (14.5) (18.8) ..... c:;• ..... Indonesia 6,994.5 90 10 3,715.9 93 7 1.88 -.r:. (18.5) (8.8) $::l -~ Thailand 8,952.1 94 6 8,740.0 97 3 1.02 (23.7) (20.6) c:J" -~ Philippines 7,779.5 85 15 6,075.7 94 6 1.28 (20.6) (14.4) Total 37,736.0 42,338.3 0.89 (I 00) (100) Note: 1. The financial statements of Singapore commercial banks include the results of the ACU operations. 2. See also Notes 1 and 2 in Tab1e 8.2 3. Figures in brackets are percentages. N Source: SGV Groups, A Study ofCommercial Banks in the Asean Countries, 1978, pp. G, Hand A5. \0 W N \0 """ TADLE 8.4 IndicatorlI o{ Financial Deepening in ASEAN Countriell ~ Singapore Malaysia Indonefill Thailand Philippinel § ~. ). MI percapita, S$I,033(1968)-S$I,622(1973) MU68(1967)-M$480(1979) Rp.6,445(1967)- 8.1,051(1967)-8.1,314(1973) P428(1966)- deflated by consumer price -S$2,371(1979) •... -M$629(1979) .... Rp.16,632(1973)- -81,327(1979) .... P422(1973)- ~ index Rp.22,7S6(1979) .... P395(1979) (7.8 per cent) 7.4 per cent) (11.1 per cent) (2.0 per cent) (-0.6 per cent) ~ 2. MI per capita, S$958( 1968)-S$ 1,499( 1973) R.a. R.a. R.a. n.a. (") denated by GOP denator -S$2,372(1979) •... (8.6 per cent) ~ .... 3. M2 per capita, SS2,410(1968)-S$3,826(1973) M$523(1967)-MS1,003(1973) Rp.17,423(1971)- 8.2,016(1967)-8.3,361(1972) P876(1966)- ~ deflated by consumer price - S$5 ,404(1979) .... -MSl,732(1979) .... Rp.24,548(1973)- -8.4,783(1979) .... P1,161(1973)- index. Rp.35,170( 1979) P1,268(1979) R<> (7.6 per cent) (10.5 per cent) (9.2 per cent) . (7.5 per cent) (2.9 per cent) 4. M2 per capit8, S52,235(1968)-S$ 3,534( 1973) n.a. n.a. n.a. n ... ~ denated by GOP denator -S$5 ,404(1979) .... ~ (8.4 per cent) ~ ~ S. M3 per capita SS3,481( 1970)-SS4,254( 1913) M$591 (1961)-MS 1,143( 1973) n.a. 8.2,246(1961)-8.3,746(1973) P921(1966)- q deflated by consumer price -S56,980(1979) .... -MS2,OI9(1979) .... -8.5,041(1919) .... P1,261(1973)- index P1,489(1979) (8.0 per cent) (10.8 per cent) (7.0 per cent) (3.8 per cent) cl' (:). 6. M3 per capita SS3,101( 1970)-S53,930(1973) n.a. n.a. R.a. n.a. denated by GOP denator -S$6,980(1979) .... - (9.4 per cent) ~' 7. MJ/GNP ratio 0.26( 1961)-0.25(1973) 0.16(1967)-0.23( 1973) 0.06(1961)- 0.1 5(1966)-0.14( 1973)- 0.13(1966)- ~. -0.29(1979) -0.21(1979) 0.10(1973)- 0.11(1979) 0.10(1973)- 0.12(1978) 0.09(1979) ~ 8. M2/GNP ratio 0.59(1967)-0.59(1973) 0.31( 1967)-0.48(1973) 0.13(1971)- 0.26( 1966)-O.35( 1973)- 0.27(1966)- M -0.65( 1979) -0.57(1979) 0.15(1973)- 0.39(1979) 0.28(1973)- ~ 0.19(1978) 0.28(1979) .., iij' TADLE 8,4 (contd) Singapore Malaysia IndonesUz ThaÜlmd P/lUippi... 9. M3/GNP ratio 0.70(1 970)-0.66(1 973) 0.35( 196 7)-0.55( 1973} o.a. 0.29(1966)-0.40(1973)- 0.28(1966)- -0.84(1 979) -0.66(1 979) 0.42(1 979) 0.30( 1973)- 0.33(1 979) 10. HA/GNP ratio 0.74(1967)-1.05(1973} 0.31( 1967)-0.52(1973} 0.24(1 973)-0.26(1 978) 0.25(1 967)-0.47(1 979) 0.31(1966)- -1.37(1979} -0.6I(1979} 0.52(1978} 11. F A/GNP ratio 1.03(1971 )-2.04(1 979) 0.79(1 973H .03( 1979} 0.38( I 973)-0.52( 1978} 0.50( 196 7)-0. 74(1 979) 0.54(1966)- 0.91(1978} 12. Banking uffices (nurrawl)' 0.70(1965H .28(1 980} 0.40(1979} 0.07(1 979) 0.30(l979} 0.28(1 978) defined) per J0.000 persuns. or Bill J 3. BankilQ': omces (broadly 1.39(1 965)-2.47( 1980) 0.60(1 979) 0.48(1 979) 0.35(1 979) 0.74(1 978) ~ defined} per 10.000 person., ..... orBD2 Eö' ..... 14. Relative share of tinancial 5.9 per cent in 1974 n.a. 1.2 per cent (l97IH.3 R.a. n.a. sectar in GDP per cent (1977) [ 15. Relative share of linancial 2.4 per cent in 1974 n.a. n.a. n.a. n.a. seetor in totallabour force ~ <:l" Note: I. BA/GNP ratio = (Total;,tSsets of commercial banks) + GNP. for all Asean COURtries, except Indoncsia where the ratio ("t) = (Total .. SlCts of deposit mone)' bankst oommcrcial banks + development banks) + GNP, -t'.J 2. FA/GNP ratio = (Total assets of tentral bank. commercial bankst finance companies. merchant banks. savinp bankst dcvclopment banks. ete.) + GNP. In fact, thc assets ofvarious types ofbanks are somewhat 'duplicated', but ifwe maintain the same definition throughout the periods, we are able to analyse the change over time, which is our miUor interest. 3. Percentage in bracket denotes the 8rowth rate duriJ1(l the long period concerned (e.,.. from 1968 to 1979) Somee,; Table. 3.9, 3.10, 4.7,4.8. 5.7, 5.8, 5.9.6.5,6.6 and 7.5. Genef'tl/: In items (I )-(6), we assurne constant J 979 prices. Banking offices narrowly defined include offices of commercial banks (with fuillicence or restricted licence). Banking offices broadly defined include offshore banks, representativ~offices of foreign banks, merchant banks. finam:e companies, post-office savjngs banks, development banks and other savings banks. Singaporc: Yetlrbook 0/ Statistics, Singapore, 1979/80; Ministry of Finance,l:.collomic- Srm'ey o/Sirrgaporr, 1979: Dept. of Statistics. Sinppore, eemus 0/ Services, 1974; and information from the Monetary Authority ofSinppore. MalaysUl: Bank Negara. Allnual Reports; Ministry of Finance, I:.'collomic Rl'port, 1979-80;Molltlrly Bulletin 0/ Statistil's 0/ W. MalaysUl: and information from Bank Negara and other banks. lndonesia: Bank Indonesia,lndotlesian Fillancial StatistiC's: ('enlral Bureau of Statislics, Firrallcial Statis,;,'s; and eentral Bureau of Statistics, Mai'J Tables 0/ the Nationallncome o/lndonesia. Thaillznd: Bank of Thailand, A'lIIual /:.'collomic Reporn : BaßJkok Bank Momllly Bulletin: and other information, Philippines: eentral Bank of the Philippines, Annual Reporn alld Statistkai BulletilJS; and 'Statements ofCondition of the CentralBank. CommercialBanks and Rural Banks', N IMF .lnter11lltiollal FinanC'iQIStatistics, August 1980. \0 VI APPENDICES: Commercial Banks Appendices: Commercial Banks 299 APPENDIX 1 Commercial banks in Singapore, as in August 1980 First Name Place of official incorporation opening 1. * Oversea-Chinese Banking Corpn. Singapore 1932 2. * Overseas Union Bank Singapore 1949 3. * LeeWah Bank Singapore 1920 4. * United Overseas Bank Singapore 1935 5. Four Seas Communications Bank Singapore 1907 6. Chung Khiaw Bank Singapore 1950 7. * The Industrial and Commercial Bank Singapore 1954 8. Bank of Singapore Singapore 1955 9. Far Eastern Bank Singapore 1959 10. Asia Commercial Banking Corpn. Singapore 1959 11. * The Development Bank of Singapore Singapore 1968 12. * Tat Lee Bank Singapore 1974 13. * The International Bank of Singapore Singapore 1975 14. Malayan Banking Corpn. Kuala Lumpur, 1960 Malaysia. 15. United Malayan Banking Corpn. Kuala Lumpur, 1961 Malaysia. 16. Ban Hin Lee Bank Penang, Malaysia 1936 17. Kwong Lee Bank Kuching, Malaysia 1926 18. * The Chartered Bank UK 1859 19. * The Hong Kong and Shanghai Banking HongKong 1877 Corpn. 19/s. Mercantile Bank UK 1856 20. * First National City Bank USA 1902 21. * Bank of America N.T. & S.A. USA 1955 22. * The Chase Manhattan Bank N.A. USA 1964 23. * The First National Bank of Chicago USA 1970 24. * The Bank of Tokyo Japan 1957 25. * The Mitsui Bank Japan 1963 26. * Bank of China China 1936 27. The Kwangtung Provincial Bank China 1939 28. * The Bank of Canton HongKong 1953 29. * The Bank of East Asia HongKong 1953 30. * Algemene Bank Nederland N. V. Netherlands 1858 31. * Banque de L'Indochine France 1905 32. Indian Overseas Bank India 1941 33. Indian Bank India 1941 34. Bank of India India 1951 35. United Commercial Bank India 1951 36. Bank Negara Indonesia (1946) Indonesia 1955 37. * Bangkok Bank Thailand 1957 Restricted-licence banks 38. * Moscow-Narodny Bank London 1971 39. * Banca Commerciale Italiana ltaly 1971 40. * Habib Bank Pakistan 1971 300 Appendices: Commercial Banks APPENDIX 1 (contd) First Name Place o[ o[ficial incorporation opening 41. * Banque Nationale de Paris France 1971 42. * Dresdner Bank Aktiengesellschaft W. Germany 1971 43. * Asien-Pazifik Bank A. C. W.Germany 1971 44. * American Express International USA 1972 Banking Corpn. 45. * European Asian Bank W.Germany 1972 46. * The Sumitomo Bank Japan 1973 47. * Credit Suisse Switzerland 1973 48. * Korea Exchange Bank S. Korea 1973 49. * Mitsubishi Bank Japan 1973 50. * First Commercial Bank Taiwan 1977 Notes: * 1. There are 22 full banks and 13 restricted licence banks which are licensed to operate Asian Currency Units. 2. The Eastern Bank, a British bank, was merged with the Chartered Bank in July 1971. 3. As from July 1973, Mercantile Bank has been merged into the Hong Kong and Shanghai Banking Corporation and operates under the latter name. So the licence of Mercantile Bank was withdrawn. Source: Through the courtesy of the Monetary Authority of Singapore. APPENDIX 2 Commercial Banks Operating in Malaysia, as at end 1979 Yearo[ Name Place o[ commencement incorporation o[ business 1. Kwong Yik (Selangor) Banking Corpn. Kuala Lumpur 1913 2. Malayan Banking Kuala Lumpur 1960 3. United Malayan Banking Corporation Kuala Lumpur 1960 4. Oriental Bank of Malaya Kuala Lumpur 1939 5. Bank Bumiputera Malaysia Kuala Lumpur 1966 6. Public Bank Kuala Lumpur 1966 7. Development and Commercial Bank Kuala Lumpur 1966 8. Ban Hin Lee Bank Penang 1935 9. Southern Banking Penang 1965 10. Kwong Lee Bank Kuching 1923 11. Hock Hua Bank Sibu 1951 12. Hock Hua Bank (Sabah) Sabah 1961 13. Wah Tat Bank Sibu 1955 14. Bian Chiang Bank Kuching 1956 15. Kong Ming Bank Sibu 1964 16. Pacific Bank Batu Pahat 1963 17. United Asian Bank* Kuala Lumpur 1973 18. Bank Buruh (M) Kuala Lumpur 1975 19. Perwira Habib Bank, Malaysia Kuala Lumpur 1976 Appendices: Commercial Banks 301 APPENDIX 2 (contd) Year of Name Place of commencement incorporation of business 20. Bank Utama Kuala Lumpur 1977 21. Sabah Banking Kota Kinabalu 1979 22. Oversea-Chinese Banking Corpn. Singapore 1932 23. Oversea Union Bank Singapore 1959 24. Chung Khiaw Bank Singapore 1951 25. LeeWah Bank Singapore 1956 26. United Overseas Bank Singapore 1966 27. Chartered Bank United Kingdom 1875 28. Hong Kong and Shanghai Banking Hong Kong 1884 Corpn.t 29. Bank of Canton Hong Kong 1957 30. Bank of America USA 1959 31. First National City Bank of New York USA 1959 32. Chase Manhattan Bank USA 1964 33. Bank ofTokyo Japan 1959 34. Bangkok Bank Thailand 1959 35. Banque de L'Indochine France 1958 36. Aigemene Bank Nederland Netherlands 1888 37. European Asian Bank Germany 1968 38. Bank of Nova Scotia Canada 1973 Note: I. *The United Asian Bank was established on 30 December 1972 to take over the operations of three Indian banks - Indian Bank (1941), Indian Overseas Bank (1937), and United Commercial (1948). The new bank commenced operation in April 1973. 2. t As from July 1973, Mercantile Bank (1860) was merged into the Hong Kong and Shanghai Banking Corporation and operated under the latter name. Source: Bank Negara Malaysia. APPENDIX 3 Commercial Banks in Thailand, as in 1979 Total assets at Domestic Banks Year of end 1979 first opening (B Million) 1. Bangkok Bank 1944 104,065 2. Krung Thai Bank I 1966 37,385 3. Thai Farmer Bank 1945 30,246 4. Siam Commercial Bank 1906 16,469 5. Ayudhya Bank 1945 15,711 6. Bangkok Metropolitan Bank 1950 12,871 7. First Bangkok City Bank 2 1934 10,402 8. Bangkok Bank of Commerce 1944 9,978 9. Siam City Bank 1941 9,400 10. Thai Military Bank 1957 7,794 302 Appendices: Commercial Banks APPENDIX 3 (contd) Total assets at Yearof end 1979 fint opening (B Million) 11. Asia Trust Bank 1965 6,532 12. Bank of Asia 1939 5,402 13. Union Bank ofBangkok 1949 4,907 14. Thai Danu Bank 1949 2,487 15. Laem Thong Bank 1948 1,716 16. Wang Lee Bank 1933 1,142 Total 276,507 As percentage of a1l banks 93.9 per cent Foreign banks 1. Mitsui Bank (Japan) 1962 3,260 2. Bank of Tokyo (Japan) 1962 3,000 3. Chase Manhattan Bank (USA) 1964 2,785 4. United Malayan Banking Corporation (Malaysia) 1964 1,849 5. Bank of America (USA) 1949 1,545 6. Chartered Bank (UK) 1894 1,248 7. Banque de L'Indochine et de Suez (France) 1897 1,067 8. Hong Kong and Shanghai Banking Corporation (Hong Kong) 1888 1,040 9. European Asian Bank (W. Germany) 1978 691 10. International Commercial Bank of Chinas (China: Taiwan) 1947 459 11. Bharat Overseas Bank 4 (India) 1947 405 12. Mercantile Bank3 (UK) 1923 334 13. Four Seas Communications Bank (Singapore) 1909 224 14. BankofCanton(HongKong) 1919 195 Total 18,102 As percentage of a1l banks 6.1 per cent Note: 1. Krung Thai Bank was the result ofthe merger of Agricultural Bank (1950) and Provincial Bank (1942) in 1966. The Government owns about 95 per cent of the share capital. 2. The bank was started as Tan Peng Choon Bank in 1934, was changed to Thai Development Bank in 1960, and was renamed as First Bangkok City Bank in 1977. 3. Mercantile Bank was originally incorporated in London. It was taken over by Hong Kong and Shanghai Banking Corporation in 1958. In other countries, such as Singapore and Malaysia, the corporation operates under the name of 'Hong Kong and Shanghai Banking Corporation'. But in Thailand its banks still maintain their separate identities. 4. The forerunner, Indian Overseas Bank, has a 30 per cent share. Six Indian commercial banks have shares in the equity capital of the Bharat Overseas Bank. 5. Formerly it operated under the name 'Bank ofChina'. Source: Bank of Thailand, Annual Economic Reports, 1968-78; and SGV Group, A Study of Commercial Banks in Thaüand, 1979, p.H1. APPENDIX 4 List of Commercial Banks and their Total Assets, Loans and Deposits, as at 22 June 1979 (Pesos Million) Banks (year o[ starting operation) Total assets Loans Deposits (per cent to total (per cent to total (per cent to total commercial banks) commercial banks) commercial banks) Domestic banks: Government and semi-government banks: 28,111.0 (27.58) 19,543.2 {28.95) 13,662.1 {28.04) ~ "l::s 1. Philippine National Bank (1916) 26,129.5 (25.64) 18,431.3 (27.31) 12,200.5 (25.04) "l::s 2. Philippines Veterans Bank (1963) 1,981.8 ( 1.94) 1,111.9 ( 1.64) 1,461.6 ( 3.00) (1) ;:::: t:l... Private domestic banks: 60,017.6 {58.89) 37,494.5 {55.55! 31,877.3 (65.43) ;::;. 3. Bank of the Philippine Islands (1851(1910) I 4,619.1 ( 4.53) 2,456.6 ( 3.64) 3,076.3 ( 6.31) ~ 4. Metropolitan Bank and Trust Company (1962) 4.419.8 ( 4.34) 2,571.9 ( 3.81) 2,709.9 ( 5.56) 5. Allied Banking Corporation (1963)' 4.165.3 ( 4.09) 2,521.1 ( 3.73) 2,030.6 ( 4.17) 9 6. Rizal Commereial Bank Corporation (1963) 3,554.9 ( 3.49) 2,098.6 ( 3.11) 1,426.9 ( 2.93) ~ 7. Unitcd Coeonut Planters Bank (1963) 3.401.0 ( 3.34) 1,446.6 ( 2.17) 2,640.2 ( 5.42) ~ 8. Far fast Bank and Trust Company (1960) 3,318.2 ( 3.26) 2,136.7 ( 3.17) 1,847.1 ( 3.78) (1) 9. China Banking Corporation (1920) 3,140.5 ( 3.08) 2,105.5 ( 3.12) 1,264.5 ( 2.59) ~ !S- 10. Philippine Commercial and Industrial Bank (1960)' 3,072.0 ( 3.01) 2,027.2 ( 3.00) 1,720.9 ( 3.53) ..... 11. Consolidated Bank and Trust Company (1963) 2,685.4 ( 2.64) 1,801.6 ( 2.67) 1,721.1 ( 3.53) 12. Pacifie Banking Corporation (! 955)' 2,674.5 ( 2.62) 1,628.4 ( 2.41) 1,284.2 ( 2.64) ~ 13. Equitable Banking Corporation (1950) 2,431.7 ( 2.39) 1,462.9 ( 2.17) 1,323.2 ( 2.72) ;:::: 14. Manila Banking Corporation (! 961) 2,388.5 ( 2.34) 1,805.5 ( 2.67) 1,411.2 ( 2.90) ?\-' 15. Republie Planters Bank (1961)' 2,276.3 ( 2.23) 1,935.2 ( 2.87) 533.7 ( 1.08) "" 16. Commercia1 Bank and Trust Co. of the Philippines (1954) 2,014.9 ( 1.98) 1,233.6 ( 1.83) 1,184.3 ( 2.43) 17. Traders Royal Bank (1963) 2,000.7 ( 1.96) 1,156.1 ( 1.71) 1,400.2 ( 2.87) 18. Insular Bank of Asia and America (1974)" 1,923.7 ( 1.89) 1,138.8 ( 1.69) 829.9 ( 1.70) 19. Philippines Banking Corp. (1957) 1,909.4 ( 1.87) 1,219.1 ( 1.81) 1,893.9 ( 1.84) 20. Prudential Bank (1952) 1,804.7 ( 1.77) 1,201.8 ( 1.78) 1,148.2 ( 2.36) w 21. Philippine Bank of Communications (1939) 1,655.8 ( 1.62) 1,172.9 ( 1.74) 672.6 ( 1.38) o 22. Security Bank and Trust Company (\ 951) 1,333.8 ( 1.31) 788.0 ( 1.17) 649.3 ( 1.33) w (continued on p.304) APPENDIX 4 (contd) w Banks (year of starting operation) Total assets Loans Deposits ~ (per cent to total (per cent to total (per cent to total commercial banks) commercial banks) commercial banks) 23. Associated Citizens Bank (1965)' 1,093.2 ( 1.07) 762.5 ( 1.13) 453.5 ( 0.93) 24. International Corporate Bank (1977)8 1,081.5 ( 1.00) 771.9 ( 1.14) 249.0 ( 0.51) 25. City Trust Banking Corporation (1961)' 956.5 ( 0.94) 711.9 ( 1.05) 428.7 ( 0.88) 26. Filipinas Manufacturers Bank (1975)'· 781.5 ( 0.77) 457.3 ( 0.68) 396.4 ( 0.81) ::t.. 27. Producers Bank of the Philippines (1971) 720.0 ( 0.71) 466.0 ( 0.69) 275.8 ( 0.57) 28. Philippine Trust Company (1916) ~ 594.7 ( 0.58) 396.8 ( 0.59) 321.1 ( 0.66) ~ Foreign banks: 13,785.7 (13.53) 10,460.4 (15.50) 3,181.9 ( 6.53) 5. ~. 29. Citibank, N. A. (902) 9,349.3 ( 9.18) 7,201.8 00.67) 1,708.9 ( 3.51) 30. Bank of America (1947) 2,661.9 ( 2.61) 2,000.4 ( 2.96) 747.6 ( 1.53) 31. Hong Kong and Shanghai Banking Corpn. (875) 1,078.6 ( 1.06) 827.8 ( 1.23) 389.9 ( 0.80) bl 32. Chartered Bank (873) 696.2 ( 0.68) 430.4 ( 0.64) 335.5 ( 0.69) :s Total commercial banks 101,914.3 (100 ) 67,498.1 000 ) 48,721.3 000 ) :s ~ Notes: 1. The Banco Espanol-Filipino de Isabel 11 was originally established in 1851. In 1910, the present name was adopted. In 1974, ~. the Bank of Philippine Islands and the Peoples Bank were emerged together. 2. The Bank was formerly called General Bank and Trust Co. - ~ 3. The present bank was the result of the merger of Merchants Bank and Commerce Bank in 1976. ~ 4. In 1964, the Peoples First Savings Bank was converted into the Progressive Commercial Bank. Then in 1975, the Pacific Bank and Progressive Bank were consolidated into the present 'Pacific Banking Corporation'. lr 5. In 1961, the Republic Savings Bank (opened in 1951) was converted into the commercial bank, 'Republic Bank'. 6. The bank was the result of merging the Asia Bank and FIBC Bank. 7. The present bank was the result of the merger of Associated Bank and Citizens Bank in 1975. 8. The bank was formerly called Continental Bank. It was reopened in 1977. 9. The Bank was formerly called Feati Bank and Trust Co. 10. The bank was the result of the merger of Filipinas Bank and Manufacturers Bank. Source: Philippine National Bank, The Philippine Commercial Banking System, First Semester, 1979, Department of Economics. Research & Statistics PNB, Manila, August 1979. Notes and References Chapter 1 1. R. F. Emery, The Financial Institutions o[ Southeast Asia (New York: Praeger, 1970). Another earlier work is S. G. Davies (ed.), Central Banking in South and East Asia (Hong Kong University Press, 1960). Dealing with central banking in the 1950s in a very sketchy manner, the book is much less useful than Emery's. 2. H. G. Grubel and T. Morgan (eds), Exchange Rate Policy in Southeast Asia (Lexington: Lexington Books, 1973). 3. S. Y. Lee, The Monetary and BankingDevelopmento[Malaysiaand Singapore (Singapore University Press, 1974); Y. C. Jao, Banking and Cu"ency in Hong Kong: A Study o[ Postwar Financial Development, (London: Macmillan, 1974). 4. E. S. Shaw, Financial Deepening in Economic Development (New York: Oxford University Press, 1973); R. I. McKinnon, Money and Copital in Economic Development (Wasbington: Brookings Institution, 1973). 5. R. I. McKinnon (ed.), Money and Finance in Economic Growth and Develop· ment (New York: Marcel Dekker, 1976); Symposium on Finance in Develop ing Countries, Journal o[ Development Studies, January 1977, pp. 1-143. 6. The books by Shaw and McKinnon were published before the oll crisis and the world-wideexplosive rise in commodity and food prices. Both South Korea and Taiwan were not spared from tbis disaster. Their inflation rates, as measured by consumer price indexes, rose to 23.6 and 46.7 per cent respec tively in 1974. Subsequently Taiwan has managed to reduce its inflation rate to single-digit figures, but South Korea's inflation rate has continued to fluc tuate in the double-digit range. 7. Y. C. Jao, 'Financial Deepening and Eoonomic Growth: A cross-section Analysis', Malayan Economic Review, April 1976, pp. 47-58; M. J. Fry, 'Money and Capital or Financial Deepening in Economic Development?', Journal o[ Money Credit and Banking, November 1978, pp. 464-75. How ever, an empirical study of 19 Latin American countries is said to offer little support for the Shaw-McKinnon view that inflation was detrimental to growth. See V. Galbis, 'Money, Investment and Growth in Latin America, 1961-73', Economic Development and Cultural Change, Aprll1979, pp. 423--43. 8. G. Ranis, 'Economic Development and Financial Institutions', in B. Balassa and R. Nelson (eds), Economic Progress, Private Values, and Public Policy (Amsterdam: North-Holland, 1977), pp. 27-56. 9. The World Bank, World Development Report 1979 (Washington, 1979), pp. 126-129. 306 Notes and References Chapter 2 1. Readers interested in Hong Kong's banking and monetary developments be fore 1973 are referred to Y. C. Jao, Banking and Currency in Hong Kong: A Study o[ Postwar Financial Development (London, 1974), and the extensive bibliography therein. 2. Although Hong Kong's natural rate of increase decreased sharply over time from 3 per cent in 1960 to 1.2 per cent in 1979, the population has in recent years been facing mounting pressure from other sources. In 1979, the popu lation rose by 6.4 per cent, as against an annual average of 2 per cent in 1970-8, owing to the large influx of immigrants (both legal and illegal) from China and refugees from Vietnam. 3. In 1966 a moratorium on new banking licences was imposed by the Hong Kong Government, following a severe banking crisis a year before. In March 1978 foreign banks were again issued licences, provided they met certain regulatory criteria. These were, IUStly, that the applicant banks were incor porated in countries whose monetary authorities exercised effective super vision; secondly, that the applicant banks had total assets, net of contra items, exceeding U8$3 billion and thirdly, that some form of reciprocity was available to Kong Kong banks. However, the moratorium was reimposed in August 1979, pending a review of the existing criteria. 4. In 1979, foreign banks represented in one form or another were respectively: London, 328, New York, 234, and Hong Kong, 220. The IJgures for London and New York are taken from The Banker, February 1980, p. 110. 5. The structural change in total deposits is even more striking if seen from a longer time perspective. Thus in 1954, the lust year for which banking statistics are available, demand deposits accounted for no less than 82 per cent of total deposits, while savings and time deposits accounted for the re maining 18 per cent. 6. 'Liability management' denotes the technique whereby a bank actively tries to influence the size and composition of its liabilities through selling debt instruments, borrowing from international money markets, and other forms of incurring debt, in order to accommodate credit demands. For a lucid dis cussion, see 8. A. 8chweitzer, 'Bank Liability Management: For Better or Worse', Federal Reserve Bank o[ Philadelphia Business Review, December 1974, pp. 3-12. 7. 'Externalliabilities and claims of financial institutions in Hong Kong', quarter ended December 31, 1979, Banking Commissioner's Office. 8. Loan syndication is a particularly important activity for the multinational merchant banks. An outstanding recent example was the Euro-dollar credit facility totalling U8$600 million for the Korea Development Bank syndicated by a consortium of 59 banks in Hong Kong in July 1979. In the past such 'jumbo loans' were as a rule put together in London or New York. 9. The two exceptions among the acquiring banks are the Hong Kong and 8hanghai Banking Corporation, and the Overseas Trust Bank, both incorpor ated in Hong Kong. However, because the former is predominantly owned and managed by British nationals, it is generally regarded as a foreign bank, and is classified as such in the licensed banks' interest rate cartel agreement. 10. The 1979 data on insurance companies are due to unpublished information provided by the Registrar-General's Department. For more detailed infor mation for the years 1975-{i, see Annex 23, Report o[ the Advisory Com mittee on Diversification (Hong Kong Government, 1979). Notes and References 307 11. I am indebted for this information to the Office of the Commissioner for Securities. 12. The issue of CDs and BAs in recent years can be seen as an attempt on the part of non-British foreign banks to reduce their reliance on the inter-bank market, which is effective1y controlled by the Hong Kong and Shanghai Banking Corporation. In general, however, unlike many other developing countries, Hong Kong is marked by the total dominance ofbank or near-bank deposits and the virtual absence of deposit substitutes. The main reason is that as there is no official regulation of deposit and lending rates, there is no incentive for banks in Hong Kong to invent substitutes to evade governmental controls. For a good discussion of such substitutes in other countries, see D. R. Khatkhate and D. P. Villanueva, 'Deposit Substitutes and their Monetary Policy Significance in Developing Countries', Oxford Bulletin of Economics and Statistics, February 1979, pp. 37-50. 13. The Hang Seng Index of stock prices (31 July, 1964 = 100) reached its peak of 1,774.96 on 9 March, 1973 after a year of frantic speculation. Then it began to fall sharply, hastened subsequently by rising interest rates, the oll crisis, and the world-wide recession. By 12 December, 1974, the index had fallen to 150.11. Over aperiod of only 21 months, the market had declined by 91.5 per cent. The fall was much sharper and speedier than the Wall Street crash of 1929-32. 14. From 1961 to 1977, the ratio fluctuated between 1.2 and 42.2 per cent, with a mean of 10.9 per cent. The time series is not tabulated, owing to lack of space. 15. For more details of the listed companies and their market capitalisation, see Annex 24, Report of the Advisory Committee on Diversijication 1979. 16. In 1975-{), two directors of a well-known conglomerate sold off their shares in advance of a poor earnings announcement. See I. Verchere, 'Wheelock Marden: Last of the Old-style Hongs',Insight, December1978, p.19. Another example was that hours before the Hong Kong and Shanghai Bank announced the sale of its holdings in Hutchison Wharnpoa on 25 September, 1979 to a leading Chinese real estate company, there was huge insider trading on the London Stock Exchange in the shares. See N. Careem, 'Hutchison's Wyllie on the Takeover', Insight, December 1979, p. 20. 17. Sir Philip Haddon-Cave, 'The Changing Structure ofthe Hong Kong Economy', paper read to the XXII Association Cambiste Internationale Congress, Singapore,6 June, 1980, para. 54. 18. Ibid., para. 56. 19. Thus we are unable to use the fmancial interrelations ratio (FIR), defmed as the value of all financial assets divided by the value of national wealth, as de scribed in R. W. Goldsmith,Financial Structure and Development (New Haven, 1969). 20. The zero growth rate of the ratio of MI to GDP may be due to the fact that, as MI is par excellence the medium of exchange, its income velocity is highly stable. 21. In 1977, Hong Kong's ratio of M2 to GDP was 107.4 per cent. This com pares with 44.9 per cent for the United States, 33.8 per cent for the United Kingdom, 84 per cent for Japan, 65 per cent for Germany, and 53.4 per cent for France. (For UK, the numerator used is M3). 22. During the post-war period, there were only four fiscal years (1946-7, 1959~0, 1965-{), and 1974-5) in which there was a deficit. In all other years, sur· pluses of various arnounts were recorded. 23. Y. C. Jao, 'Financial Deepening and Economic Growth: A Cross-section 308 Notes and References Analysis', Malayan Economic Review, April 1976, pp. 47-58. See also the references to other empirical studies in Chapter 1. 24. This is the major theme of the present writer's book, Banking and Currency in Hang Kong: A Study of Postwar Financial Development (London, 1974). See especially Chapters 2 and 10. This theme has recently been reaffirmed by an official study: Report of the Advisory Committee on Diversification 1979, especially para. 189. 25. For earlier discussions of the currency system, see F. H. H. King, Money in British East Asia (London, 1957), Chapter 5; T. B. Lin, Monetary Behaviour under the Sterling Exchange Standard: Hang Kong as a Case Study (Hong Kong, 1971): T. B. Lin,Das monetäre System und das Vehalten desAngebotes an und der Nachfrage nach Geld in Hang Kong (Freiburg, 1970). 26. The extremely open nature of the Hong Kong economy can be seen from the fact that in 1978 the ratio of total external trade to GDP was 169.1 per cent. This compares with 15.5 per cent for the US, 48.7 per cent for the UK, and 18.1 per cent for Japan. 27. For arecent official view, see C. P. Haddon-Cave, 'The Hong Kong Economy: the Later Phase of the Recovery', paper presented to the Hong Kong Manage ment Association, 9 September, 1977. 28. P. C. Hayward, 'Hong Kong's Monetary System Today', paper presented to the First Asian Foreign Exchange and Money DealersCongress, 7 April, 1978. 29. It is true that under the sterling exchange standard, Hong Kong also suffered considerable exchange loss, but this arose from the unanticipated devaluation of the metropolitan currency. The Exchange Fund did not take any ex ante exchange risk. See C.P. Haddon-Cave, 'The Stability of the Hong Kong Dollar', Asian Finance, March 1976, pp. 48-51. 30. This conceptual distinction was first made in 1. G. Gurley and E. S. Shaw, Money in a Theory of Finance (Washington, 1960). 31. For an explanation of the methodology, see M. Friedman and A. J. Schwartz, A Monetary History of the United States, 1867-1960 (Princeton, 1963), Appendix B. 32. Y. C. Jao, 'Proximate Determinants of Money Supply in Hong Kong', Hang Kong Economic Papers, March 1974, pp. 1-17. 33. At the end of 1979, the definitions of MI and M2 were revised again to ex clude DTCs' deposits with the licensed banks. The time series for the two were, however, backdated only to December 1978. For this reason we con tinue to use the unrevised MI and M2 series for comparative purposes. M3 is, however, unaffected by the revision. 34. For studies of income and interest elasticities of the demand for money during the period 1955-73, see T. B. Lin, Monetary Behaviour under the Sterling Exchange Standard (Hong Kong, 1971), pp. 18-29, and Y. P. Ho, 'The Demand for Money in Hong Kong, 1961-73: Some Empirical Estimates', New Asia College Academic Journal, Vol. XVII, 1975, pp. 285-305. 35. See P. Cagan, The Demand for Currency Relative to Total Money Supply (New York, 1958); J. D. Khazzoom, The Currency Ratio in Developing Countries (New York, 1966). 36. Y. C. Jao, op. cit., pp. 151-53. 37 _ Most international banks, which belong to Category 1, charge the same prime rate as the two note-issuing banks, whereas the Category 5 banks can be ex pected to charge a prime rate of at least 1 per cent higher. F or various types of loans, the lending rate on import-export financing is normally the lowest, while those on property and consumer loans are the highest. From April 1979 to July 28, 1980, some leading banks offered a concessionary rate Notes and References 309 1 % per cent lower than the best lending rate to importers of foodstuffs and designated raw materials used in exports. 38. Thus, the rate offered by DTCs on 3-month deposits in April 1980 was on average 4.5 per cent higher than that offered by Category llicensed banks. 39. For adescription of how the index is constructed, see 'Special Review: The Effective (Trade Weighted) Exchange Rate of the Hong Kong Dollar', Hong Kong Monthly Digest of Statistics, April 1976, pp. 54-8. 40. Until very recently, there were no balance of payments data at all apart from visible trade statistics. However, in the 1980-1 Budget Speech, some prelimi nary figures on invisibles for the period 1970-9 were given for the first time. They show that, prior to 1978, Hong Kong's invisible trade surplus had al ways been greater than its traditional visible trade deficit, resulting in an overall favourable balance on the current account. In 1978, however, a huge current account deficit of HK$2,058 million was recorded for the first time since 1970, but this was reduced to HK$485 million in 1979. See The 1980-1 Budget: Speech by the Financial Secretary, p. 17. 41. Underlying data from 'External liabilities and claims of the licensed banks and DTCs', Banking Commissioner's Office. 42. For a seminal discussion of the problem, see A. A. Alchian and B. Klein, 'On a Correct Measure of Inflation', Journal of Money Credit and Banking, Vol. 5, 1973, pp. 173-91. 43. The existing unemployment figures, compiled on a biannual basis, show that the unemployment rate declined from 9 per cent in September 1975 to 3.4 per cent in September 1979. See 1980-81 Budget: Economic Background, Chapter 4. 44. See for example, M. Friedman, The Optimum Quantity oi Money (Chicago, 1969), Chapters 9-12. 45. For full details, see Y. C. Jao, 'Inflation and Monetary Policy in Hong Kong', Hong Kong EconomicJournal, September 1979, Vol. 111, No. 6, pp. 20-2. 46. P. C. Hayward, 'Hong Kong's Monetary System Today', paper presented to the First Asian Foreign Exchange and Money Dealers Congress, 7 April, 1978. 47. As measured by consumer price indices, the inflation rate averaged 1.5 per cent in 1975, but accelerated to 3.8 per cent in 1976 and 5.5 per cent in 1977. As pointed out earlier, the consumer price index is not a correct measure of inflation. Grave errors can be made if policy decisions are based on inappropriate price indices. The classic case was Britain's return to the gold standard in 1925 at the pre-war parity, which according to Keynes was influenced by the biased wholesale price index. See J. M. Keynes, 'The Economic Consequences of Mr. Churchill' (1925), reprinted in Essays in Persuasion, Collected Writings of John Maynard Keynes, Vol. IX (London, 1972). 48. Y. C. Jao, 'The Budget of Hong Kong, 1978-79',' speech to Y's Men Club, 16 March, 1978. 49. From 14 April, 1977 to 30 April, 1978, the Hong Kong and Shanghai Bank and the Chartered Bank offered a lower rate on 6-month and l-year time deposits than other members of Category 1 banks, but this discrepancy was removed from 1 May, 1978. 50. In the third quarter of 1978, for example, both MI and M2 were increasing at 30 per cent, and bank credit was increasing at 38 per cent, per annum. The trade deficit during the first 9 months widened to HK$6,01l million against HK$2,622 million in the same period a year before, while the trade weighted index of exchange rate had fallen to 95.3 by the end of September 1978, representing a depreciation of 15 per cent over a 12-month period. 310 Notes and Rejerences 51. See The 1980--81 Budget: Speech by the Financial Secretary, especially paras. 317-20. 52. Duting the 6 months ended September 1979, real wages in the manufactur ing industries declined by 4.3 per cent, while unemployment rate rose from 2.3 to 3.4 per cent, mainly as a resuU of the large influx of immigrants and refugees. The growth rate of total fmal demand for 1980 has been estimated at about 10 per cent, only marginally higher than that of GDP at 9 per cent. 53. One aspect of the inadequacy of monetary statistics was brought to light during heated arguments between the Government and foreign banks. In July 1979 the Secretary for Monetary Affairs hinted that certain groups of banks paid Iittle heed to the Government's wish to restrain lending, and in November his Deputy publicly accused some US banks for lending at a much higher rate than others. Subsequently the US banks and other foreign banks appear to have produced evidence to convince the authorities that a consider able part of their loans made in Hong Kong in fact has had Iittle impact on HongKong. 54. For a useful recent survey, See J. R. Artus and A. D. Crockett, Floating Ex change Rates and the Need tor Surveillance, Princeton, Essa} s in International Finance, No. 127, May 1978. 55. Thus in April 1980, although the prime rate was at its record high of 16 per cent, after adjusting for the expected rate of inflation, it was, in real terms, lower than in 1975, even though in the latter year the prime rate was suc cessively reduced from 9 to 6% per cent. Similarly, the real yield on the most popu1ar form of monetary asset in Hong Kong, savings deposits, declined from 1.35 per cent in 1975 to ~ per cent in the fust quarter of 1980, even though the nominal rate lOse from an average of 3% to 10% per cent during the same period. 56. A very recent example is provided by the collapse of the Australia-based Nugan Hand Bank in April 1980. It isknown that many Hong Kong depositors lost heavily since they put money into the defunct bank 's head office through the intermediation of its representative office in Hong Kong. The activities of representative offices, hitherto almost totally unregulated, have called attention to the existence of a troublesome 'grey area' in the fmancial sector. 57. See C. P. Haddon-Cave, 'Government and the Financial Services Sector', paper read to the Hong Kong Society of Accountants on 4 November, 1977. 58. For an interesting discussion, see 'Proposals for aReform of the Monetary System', Asian Monetary Monitor' March-April 1979 , pp. 9-23. 59. The abolition of the interest withholding tax was also recommended by the Report on the Advisory Committee on Diversification, 1979. See para. 346. However, the recommendation was made principally to advance HongKong's position as a financial centre vis-O.-vis Singapore rather than as an anti inflationary device. The yield from the withholding tax amounted to HK$118 million in 1978-9, or less than 1 per cent of total revenue. Chapter 3 1. For a year after the Separation of Singapore from Malaysia and before the Currency Split, the Singapore Government requested Bank Negara Malaysia to supervise commercial banks in Singapore. 2. For a discussion of the causes and effects, see Lee Sheng-yi, The Monetary and Banking Development o[ Malaysia and Singapore (Singapore University Press, 1974), Chapter 10, pp. 222-42. 3. Primary production in Singapore is limited to pig- and chicken-farms, horti- Notes and References 311 culture and fishery, which contributed about 1.6 per cent of GDP in 1977 - see the 1978 Budget Statement, Statistical Appendix Table 2.2. 4. See Lee Sheng-yi,Public Finance and Public Investment in Singapore (Institute of Banking and Finance, 1978), Chapter 6. 5. For a list of financial institutions as in May 1980, see MAS, The Finaneial Structure of Singapore, 1980 (revised edition) pp. 85-94; and also Lee Sheng-yi, 'Financial Structure and Recent Development of Banking in Singapore', The Credit Journal, December 1978. 6. For the operation of MAS as a bankers' bank and as a Government bank, and its holding of gold and foreign exchange, see the balance sheet of MAS as presented in itsAnnual Reports, 1971-1979/80. 7. See Singapore Currency Board Annual Reports, 1968 and 1969; and Lee Sheng-yi, The Monetary and Banking Development ofMalaysia and Singapore pp. 237-40. 8. See Ordinance No. 51 of 1960 of Singapore, Clauses 17 and 18. For further discussion of the redemption problem, see Lee, op. eit., pp. 229-31. 9. In March 1980, official foreign reserves of Singapore were S$12,891 million, being about four times gross currency issue. Official foreign reserves include the holdings of the MAS, and the Singapore Currency Board. They include gold and foreign exchange (99 per cent), Reserve Position in IMF, and Special Drawing Right. 10. See a fuH analysis, see Lee, op. eit., Chapter 5 , 'Development of Commercial and Merchant Banks', pp. 65-97. 11. For a discussion of the similarities and differences between local and Western banks, see Lee, op. cit., pp. 83-8. 12. It has now a representative office in Djakarta and an offshore banking branch in Manila. 13. For a discussion of the relative strength of the OCBC and UOB banking groups, see Lee Sheng-yi and Kenny Wee, 'Liquidity and Growth: the Case of a Local Bank', South Asian Journal of Soeial Seience, 1975. 14. Since the business activities of merchant banks have such a wide and variable scope, it is rather difficult to formulate a merchant bank act. Singapore has not such an act and so does not issue proper licences for merchant banks, but grants approval for their operation. 15. The ACU licence is gran ted to a banking unit to operate in the Asian Currency Market. A financial institution (a commercial bank, merchant bank, or invest ment company) can apply to the Monetary Authority of Singapore for the licence. 16. An offs hore bank licence is granted to a foreign bank to operate in the Asian Currency Market only, but not in the national banking system, such as taking deposit and lending in Singapore. 17. By regulation, the minimum capital requirement for local banks is $3 million. Foreign banks are required to maintain the minimum head office funds of $3 million. 18. The annual growth rate of loans was slowed down from 44.4 per cent in 1973 to 10.7 per cent in 1974 and to the average of 11.1 per cent in 1974-7. Similarly the growth rate of deposits was slowed down from 22.4 per cent in 1973 to 12.6 per cent in 1974 and to the average of 11.6 per cent in 1974-7. 19. Liquid assets include cash, balances with MAS, money at call with discount houses, Treasury bills, trade bills and S$NCD. 20. See Lee Sheng-yi, Monetary and Banking Development of Malaysia and Singapore, pp. 115-18 and Table 6.9. 21. From 1963 to 1965, Bank Negara had jurisdiction over Singapore. 312 Notes and References 22. In the 1960s and before 1975, there was agentlemen's agreement among bank afflliated finance companies not to pay deposit rates higher than the bank's by more than 1 per cent. 23. The percentages are derived from the assets and liabilities offinance companies, as stated in the Monetary Authority of Singapore, Annual Reports, 1972- 1979/80. 24. See The Post Office Savings Bank of Singapore.- 100 years (POSB, July 1977), pp. 20-1, 23-4, 26, and 29-31. 25. For the main application of deposit funds, the nu mb er of savings accounts and the progress of POSB, see Post Office Savings Bank, Annual Report, 1979-80 and Monetary Authority of Singapore, Annual Report, 1979-80, pp. 38-40. 26. See Central Provident Fund Annual Reports, 1967-79; and Monetary Auth ority of Singapore, Annual Report, 1979-80, pp. 40-2. 27. See MAS, Financial Structure of Singapore, 1980 (revised edition), pp. 45-8; MAS, Annual Report 1979-80, pp. 40-2; and Lee Sheng-yi,Public Finance and Public Investment in Singapore (Institute of Banking and Finance, 1978), p.158. 28. In early 1978, the Hong Kong government began to impose a tax of 17 per cent on net interest income from offshore loans and related transactions. 29. For a discussion of the strength and weakness ofthe offshore banking system, see S. Y. Lee, 'Recent Development in Asian Currency Market and Asian Bond Market', Kajian Economie Malaysia, December 1979. 30. Monetary Authority of Singapore, Annual Report, 1976-7, pp. 33. 31. A manufacturing firm can claim an investment allowance to the extent of 10-50 per cent of the value of capital equipment which is newly installed. Such an investment allowance is used to offset 'taxable profit' and is additional to the normal depreciation allowances in the business income tax. 32. The net funds raised by the public sector had a rising trend from $641 million in 1973 to $1,540 million in 1979, and, moreover, their share of the total funds raised in the capital market was increased from 60 per cent to 92 per cent in the respective years. In contrast, the demand for capital funds by the private sector fluctuated in the business cycle from 40 per cent of the total funds in 1973 (the height of the boom) to 2 per cent in 1977 (when the stock market was very dull). See Monetary Authority of Singapore, Annual Report, 1975-1979/80, p. 46. 33. See Census of Services, 1974, Vol. 11, Department of Statistics, (Singapore, October 1977), p. 55; and Lee Sheng-yi, 'The Role of FinanciaI Institutions in the Singapore Economy', Nanyang University Local Committee of AlESEC, Yearbook,1977-8. 34. The NTUC (National Trade Union Congress) Welcome Consumers' Co operative Ud. has set up ten supermarkets and 79 Fair Price Shops since 1973. The objective is to sell daily necessity goods such as rice and other utilities to consumers at a low price or at cost. This had a good effect in reducing the price increase du ring the height of the inflation, 1973-4. 35. Outstanding Government securities were increased from $2,796 million at end 1974 to $3,822 million at end 1975 and to $9,720 million at end 1979. See Lee Sheng-yi, 'Major Issues in Public Debt Management in Singapore', a paper presented in the Symposium in March 1979 and published in Mukul Asher and Susan Osborne (eds), Issues in Public Finance in Singapore (Singapore University Press, 1980). 36. See MAS Annual Report, 1979, p. 47, and Quarterly Bulletin 1st Qr. 1980, p.40. Notes and References 313 37. See Lee Sheng Vi, Public Finance and Public Investment in Singapore, pp. 160-1; also Lee Sheng-yi, Monetary and Banking Development o[ Malaysia and Singapore, p. 174. 38. For a full discussion, See Lee Sheng-yi, Monetary and Banking Development in Malaysia and Singapore, pp. 243-58. 39 The US dollar crisis started in May 1971, when a large amount of funds flowed from the United States into Japan, W. Germany , and other Western European Countries. President Nixon of the United States proclaimed 'package' measures in August 1971. Then there was the Smithsonian Agreement for Currency Realignment in December 1971. Finally, the US dollar was officially declared to be devalued against gold by 7.89 per cent, and the official price of gold was increased from US $35 per ounce fine to US $38. 40. Information kindly provided by the MAS. 41. The Committee of Twenty on Reform of the International Monetary System and Related issues was formed in the spring of 1972; it was in fact an extension of the Group of Ten plus nine groups of developing countries. 42. For a discussion of the balance of payments in Singapore, see S. Y. Lee, 'Recent Trends in the Balance of Payments of Malaysia and Singapore', Malayan Economic Review, October 1974. 43. In legal code, the Sterling Area is called the 'Scheduled Territories'. Malaysia had long been within the 'Schedule Territories'. 44. Important writings of the modern 'monetarist' school include Milton Friedman, 'The Quantity Theory of Money - aRestatement', in Milton Friedman (ed.), Studies in the Quantity Theory o[Money, (University of Chicago Press, 1956); Don Patinkin, Money, Interest and Prices (New York: Harper and Row, 1965) (2nd ed.); and H. G. Johnson, Essays in Monetary Economics (Harvard University Press, 1967). 45. All economists agree on this point - classical, Keynesian, post-Keynesian and 'monetarist ' schools. 46. It is estimated that in the case of Singapore the marginal propensity to im port is about 0.30, the marginal propensity to consume is about 0.27 and consequently the multiplier is rather low, being about 1.75. The low multiplier would reduce the effect ofmonetary-fiscal policy on income growth. For a statistical analysis of these ratios, see Lee Sheng Vi, Public Finance and Public Investment in Singapore, pp. 184-5 and 225-7. 47. The detailed analysis of monetary growth (MI) is as folIows: 1st Qr. 1969-4th Qr. 1970 17.3 per cent 4th Qr. 1970-1st Qr.1972 10.1 per cent 1st Qr. 1972-1st Qr. 1973 36.3 per cent 1st Qr. 1973-4th Qr. 1974 8.1 per cent 4th Qr. 1974-2nd Qr. 1976 21.3 per cent 2ndQr.1976-4th Qr.1979 12.4 per cent See Federal Reserve Bank of San Francisco,Pacific Basin Economic Indicators, June 1980. 48. In theoretical concept, this is the Marshallian K, which is equal to M/Y. In his analysis of demand for money he postulated that people kept a portion of income in money form for transaction purpose. See A Marshall, Money, Credit and Commerce (London: Macmillan. 1923). 49. See S. Y. Lee, 'Money, Quasi-Money and Income Velo city ofCirculation in Malaya and Singapore, 1947-1965', Economic Development and Cultural Change, January 1971. 314 Notes and References Regression of M1/Y ratio on pan-Malayan income per capita, interest rate, and consumers prices for 1949-65: M1/Y = 0.273150 - 0.000125 Y/N - 0.005737i - 0.088409 P t value : (- 2.896) (-2.454) (1.310) Multiple correlation coefficient, R = 0.7748 Standard error of residual, SER = 0.0155 F ratio = 6.5079 Durbin-Watson D Statistics = 1.2187 where Y = GNP, N - population, Y/N = income per capita, i = interest rate (London Treasury bill rate), P = average cost of living index for Malaya and Singapore. 50. Quoted from Wong Kum Poh, 'Demand for Money in Singapore, 1961-74', a discussion paper No. 1/76 of the Monetary Authority of Singapore, August 1976. 51. (i) Regression of change in currency, 4 C, on balance of payments, 1967-79: 4 C = 48.991 + 0.1852 B/P R' = 0.4008 t value = 2.7125 :. statistically significant at 5 per cent level. (ii) Regression of change in MI, 4 MI, on balance of payments, 1967-79: 4 MI = 39.04 + 0.3952 B/P R 2 = 0.4216 t value = 2.8315 :. statistically significant at 5 per cent level. (iii) Regression of change in M2, 4 M2, on balance of payments, 1967-79: 4 M2 = 170.89 + 0.8163 B/P R 2 = 0.3525 t value = 2.4471 :. statistically significant at 5 per cent level. 52. There is much error and omission in the estimation of the balance of pay ments of Singapore. In fact, the accumulation of official foreign reserves is used as an indirect estimate of the overall balance. 53. For the statistical figures of the determinants of money supply of Singapore, see Monetary Authority of Singapore, Annual Reports, 1972-1979/80, p.1l. Chapter 4 1. The external reserves of the Bank follow the tradition or practice of the old Malayan Currency Board. The Malayan, British Borneo Currency Agreement, 1960, permitted tthe fiduciary issue of $300 million, which was tantamount to maintaining minimum external reserves covering about 81 per cent of currency issue. See Lee Sheng-Vi, The Monetary and Banking Development of Malaysia and Singapore (Singapore University Press, 1974), p. 23; and Bank Negara Malaysia, Annual Report and Statement of Accounts, 1979, p. 161, and various issues. 2. In absolute value, deposits of domestic banks and foreign banks were M$13,927 million and M$7 ,173 million respectively; 10ans of domestic banks and foreign banks to non-bank customers were M$9,111 and M$7,357 re spectively - see Bank Negara Malaysia, Monthly Statistics Bulletin, May 1980, pp. 12 and 15. Notes and References 315 3. Quoted from Bank Negara Malaysia, Annual Report, 1977, p. 55. 4. 'Despite the sharp rise in bank assets, the increase of capital funds has not kept pace with the growth in bank operations' - quoted from Bank Negara Malaysia, Annual Report, 1979, p. 61. 5. At end 1979, commercial bank lending to the bumiputera community amounted to M$2,650 million, as compared with M$14,686 million for total bank lending. See Bank Negara Malaysia, Annual Report 1979, p. 72. 6. See Bank Negara Malaysia, 'Guidelines on Bank Lending', dated 1 October 1976,20 October 1978, and 23 October 1978. 7. Thus many Malaysian citizens of Chinese or Indian descent who may be born in Malaysia are not classified as 'bumiputera'. 8. See Bank Negara Malaysia, Annual Report 1979, p. 74. 9. See Bank Negara Malaysia, Annual Reports, 1975, p. 67, and 1977, pp. 57- 8. 10. See SGV, 'A Study of Licensed Borrowing Companies in Malaysia, 1976, p.E, and Bank Negara Malaysia, Money and Banking in Malaysia (Kuala Lumpur, 1979), pp. 187-8. 11. See Bank Negara Malaysia, Annual Reports, 1979, p. 77, and various issues; and Bank Negara Malaysia, Money and Banking in Malaysia, pp. 177-88. 12. In Singapore, there is a similar regulation that a finance company's ratio's of total assets to shareholders' fund should not exceed 9. 13. For a discussion, see Bank Negara Malaysia, Annual Report, 1977, pp. 68-9, and 1979, p. 76. 14. In contrast, merchant banks in Singapore have to borrow heavily from banks abroad, particularly their head offices. For the sources and uses of merchant bank funds, see Bank Negara Malaysia, Annual Report, 1979, p. 82, and various issues. 15. Quoted from Bank Negara Malaysia, Annual Report, 1977, p. 73. 16. The ratio of domestic borrowings (including deposits) to shareholders' funds is 15: 1; and the ratio of domestic borrowings (including deposits) and con tingent liabilities (including guarantees and acceptances) to shareholders' funds is 20 : 1. 17. Bank Negara Malaysia, Annual Report, 1979, p. 89. 18. For the direction by the Agricultural Bank, see Bank Negara Malaysia, Annual Reports, 1978, p. 81, and 1979, p. 90. 19. It is interesting to note that housing finance even exceeded industrial finance (M$ 3,428 million) and agricultural finance (M$ 2,970 million) in 1979. 20. They are (1) Short Deposit (M) Berhad (1966), (2) Malaysia Discounts Berhad (1971), KAF Discount Berhad (1975), (4) Asiavest Discount House (M) Berhad (1976), and (5) Kota Discounts (1979). 21. See Bank Negara, op. cit., 1979, p. 85. 22. In 1979, net funds raised by the public sector and private sector, were M$2,528 million and M$I92 million respectively. See Bank Negara, ap. cit., p. 103. 23. 'Financial deepening' will be discussed further in Chapter 8. 24. The definition of liquid assets has been changed several times. Since 1965, foreign liquid assets have been excluded from the calculation of the liquidity ratio, and hence the ratio was lowered from 25 per cent of total deposits to 20 per cent. In 1976, the statutory liquidity ratio (including localliquid assets only) was increased to 25 per cent. 25. Under the old requirement and definitions, before March 1979, commercial banks had to maintain the minimum actualliquid asset ratio of 12.5 per cent and the minimum liquidity ratio of 25 per cent against total deposits less savings deposits. 26. Public investments as presented in the Annual budget and the three Five Year 316 Notes and References Plans (First Malaysian Plan, 1966-70, Second Malaysian Plan, 1971-5 and Third Malaysian Plan, 1976-80) draw substantial resources in the economy. 27. A more detailed analysis of the increase in money supply, MI, on a quarterly basis is as f ollows: Percentage increase 1969, 1st Qr. -1972, 2nd Qr. 8.5 1972.2 -1973.4 38..3 (highest) 1973.4 -1975.4 8.1 (lowest) 1975.4 -1980.1 18.5 See Federal Reserve Bank of Francisco, Pacific Basin Economic Indicators, June 1980, p. 38. 28. Bank Negara Malaysia, Money and Banking in Malaysia (Kuala Lumpur, 1979), p. 345-6. See also the balance sheets ofBank Negara Malaysia,Annual Reports, various issues. 29. For a discussion and for more detailed statistical figures, see S. Y. Lee, 'Recent Trends in the Balance of Payments of Malaysia and Singapore', Malayan Economic Review, October 1974, pp. 73-6. 30. (i) Regression of the change in currency in active circulation, AC, on the balance of payments, AB in 1968-79 in Malaysia: AC= 153.54 + 0.193AB R' = 0.446 t value = 2.837 :. statistically significant at 1 per cent level. (ü) Regression of the change in MI, AMI, on the balance of payments, AB in 1968-79: AMI = 281.36 + 0.446AB R' = 0.472 t value = 2.990 :. statistically significant at 1 per cent level. (iü) Regression of the change in M2, AM2, on the balance of payments, AB in 1968-79: AM2 = 553.26 + l.730AB R' = 0.663 t value = 4.436 :. statistically significant at 1 per cent level. (iv) Regression of the change in M3, AM3, on the balance of payments, AB in 1968-79: AM3 = 945.99 + 1.131AB R' = 0.434 t value = 2.769 :. statistically significant at 1 per cent level. 31. See also Bank Negara Malaysia, Money and Banking in Malaysia, p. 342. 32. See Ibid., pp. 336-7 and Lin See Yan, 'Malaysia: Money and Monetary Notes and References 317 Management Since Independence, 1957-76', Ph. D. Thesis presented to Harvard University, 1977, Chapter 5. Chapter 5 1. For example, Bank Dagang Negara was evolved from Escomptobank; Bank Ekspor Impor Indonesia from NHM; Bank Bumi Daya from Nationale Handels Bank; and Bank Rakjat from several Dutch banks after merger. 2. See Bank Indonesia, Report for the Years 1960-1965 (Djakarta, 1968), pp. 52-4; and D. Cole, 'New Direction in the Banking System', Bulletin of lndonesian Economic Studies, Vol. V., No. 2, July 1969, pp. 60-9. 3. They are (1) Algemene Bank Nederland N.V., (2) American Express Inter national Banking Corp, (3) Bangkok Bank Ltd., (4) Bank of America NT & SA., (5) Bank of Tokyo, (6) Chartered Bank, (7) Chase Manhattan Bank, (8) Citibank N.A., (9) European Asian Bank, (10) Hong Kong and Shanghai Banking Corporation, and (11) P. T. Bank Perdania, which is ajoint venture. 4. To illustrate, in a discussion with Bank Pasar Tridaja and Bank Pasar Gunung Kencana, in Djakarta in February 1979, the banks stated that their fixed deposit rates were 1.5-1.8 per cent per month for 3 months, 2 per cent for 6 months and 2% per cent for 12 months, and their lending rate was as much as 5-{j per cent per month. 5. Members of an 'arisan' contribute money to a common pool, which in turn distributes money to each member periodicaUy in a monthly meeting. This is mainly a consumer credit. In general, no interest is charged. 6. See Bank Indonesia Act, No. 13, of 1968, concerning Central Banking. 7. In the Principal Regulations on Banking (Act No. 14 of 1967), Article 31, pp. 9 and 31, what they caU 'liquid asset ratio' is in fact cash-reserve ratio. In Singapore and Malaysia, the cash-reserve ratio and liquid-asset ratio are considered two distinct concepts. 8. Quoted from Bank Indonesia, Report for the Financial Year 1977/78, pp. 31. 9. Information from discussion with private banks, which, however, were rather sceptical of the possibility of so many mergers. 10. Decision ofthe Bank Indonesia Board of Directors and Bank Indonesia Circular letter, all dated 10 March 1978. See Bank Indonesia, Report ofthe Financial Year 1977/78, p. 32. 11. For the regulations on the licensing of foreign exchange banks, see Bank Indonesia,op. cit., p. 34. 12. Quoted from Bank Indonesia Act, No. 13 of 1968, concerning Central Bank ing, Articles 7,8 and 9. 13. See the 1968 Act,op. cit., Explanatory Statement, p. 19. 14. Aritua Arief, Banking and Money in lndonesüz: An Econometric Study (Jakarta: Aritua Arief Associates, 1978), pp. 18-19. 15. See 'Financing Agriculture and Agro-based Industries in ASEAN Countries' (documentation of the meeting of the Committee on the Financing of Agriculture and Agro-based Industries, ASEAN Banking Council), March 1977, pp. 9 and 3. Further information was obtained through interview with Bank Rakjat in February 1979. 16. BIMAS means 'm ass guidance'. It is a comprehensive project to help farmers to acquire technical skill and to develop intensive farming. 17. The inter-bank money market was organised by Bank Indonesia in 1974-5. 18. During interview, some banks remarked that they might have to take the risk of exchange fluctuation if they deposited US dollars or other foreign currency in the Asian Dollar Market. 318 Notes and References 19. See Bank Pembangunan Indonesia, Operations o[ Bapindo, December 1979, pp. 18-21. 20. Pertamina is a giant state-owned corporation, engaged in the oil business and other diversified activities such as aviation, tourism, insurance, agriculture and real estate. On account of mismanagement, Pertamina was unable to pay its hugh international debt in 1975; actually it had used short-term loans to finance long-term projects. 21. See Bank Indonesia, Laporan Tahun Pembukuan, 1972/3-1976/7, and H. W. Arndt, 'The Impact of the International Economic Crisis on the Indonesian Economy', in the UN, Economic Bulletin tor Asia and the Paci[ic, Vol. XXIX, No. 2, December 1978, p. 32. 22. For an analysis of the monetary condition after deva1uation, see Howard Dick, 'Survey of Recent Developments', Bulletin o[ Indonesian Economic Studies, March 1979, pp. 4-20 and H. W. Arndt, 'Monetary Policy Instru ments in Indonesia', BIES, November 1979. 23. These were only short-term phenomena. Confidence was gradually restored in 1979. 24. This refinancing credit can be treated as an implicit subsidy to banks. H. W. Arndt argues strong1y for the liberalisation of the present rigid financial structure. See Arndt, op. cit., pp. 120-2. 25. This is the information from my interview with many banks. 26. See Bank Indonesia, Report tor the Financial Year, 1978/79, p.23. 27. Contrary to expectation, Indonesia had actually the current account surplus in the balance of payments of about US $2.4 billion in 1979-80 after devaluation. 28. For the statistical figures, see Bank Indonesia, Indonesian Financial Statistics, May 1980, and Bank Negara, Weekly Report, March 1980, p. 11. See also Anne Booth and Amina Tyabji, 'Survey of Recent Developments', BIES, July 1979, for a discussion ofmonetary adjustments after devaluation. 29. We divide the GNP at constant (1973) price (Table 5.9) by the mid-year estimate of population to arrive at the 'real' GNP per capita, on the basis of which we calculate the percentage change as folIows: + 5.1% in 1970, + 4.5% in 1971, + 1.2% in 1972, + 7.7% in 1973 + 3.4% in 1974, + 2.9% in 1975, + 3.9% in 1976 + 5.8% in 1977, + 4.7% in 1978. 30. For an analysis of the income velocity and price change from 1951 to 1972, and the explanatory factors, see R. M. Sundrum, 'Money Supply and Prices: a Re-interpretation', Bulletin 0 [ Indonesian E conomic Studies, Vo 1. IX, No. 3, November 1973, pp. 78-9. 31. See J. M. Keynes, 'Alternative Theories of the Rate of Interest', Economic Journal, Vol. XLVII, 1937, pp. 246-7. Chapter 6 1. See Bank ofThailand, Statistical Bulletin, September 1979, pp. 2-3 and 8-9, for, 'Consolidated Statement of the Monetary System' and 'The Assets and Liabilities of the Bank of Thailand'. 2. Sa-Ngoh Punnarugsa estimated that the profit rate after tax of commercial banks in Thailand was about 16 per cnt in 1970-2. Generally speaking, bank ing business in Thailand is very profitable because ofthe favourable circum stances and the restricted entry. See Sa-Ngoh Punnarugsa, 'Profitability of Commercial Banks in Thailand', in Prateep Sondysuvan (ed.), Finance, Trade Notes and References 319 and Economic Development in Thailand, Essays in Honour of Khunying Suparb Yossundara (Bangkok : Sompong Press, 1975), pp. 82-5. 3. The latest domestic banks inc1ude Thai Military Bank (1957), Asia Trust Bank (1966) and Krung Thai Bank (1966); and the latest foreign banks inc1ude Chase Manhattan Bank (1964), United Malayan Banking Corporation (1964) and European Asian Bank (1978) - see Appendix 3. 4. See SGV, A Study of Commercial Banks in the ASEAN Countries, 1978, pp. K23 and K24. 5. Liquid assets inc1ude cash in hand, balances at the Bank ofThailand, balances at other non-commercial banks in Thailand, bank balances abroad, gold and unobligated government securities. See Bank of Thailand, Statistical Bulletin, September 1979, p. 16. 6. 'Cash' inc1udes cash in hand and balances at the Bank of Thailand. 7. Dr Alek A. Rozental comrnented in the late 1960s that Thai banks were 'under-capacity', meaning 'they do not push their lending operations to the full limits of their capacity to obtain additional funds'. In view of the rising loan/deposit ratio and the illiquid position of banks in 1979, such a criticism is not really valid. See his book, Finance and Development in Thailand (New York: Praeger, 1970), p. 349. 8. See Bank of Thailand, Annual Economic Report, 1978, pp. 77--8. 9. There are no discount houses in Thailand. Banks, however, can rediscount their Treasury bills with the Bank of Thailand, or can borrow from it on the collateral of Treasury bills and Goverrunent securities. 10. In an econometric study of the bank port folio behaviour in 1962-73, Dr. Nimit Nontapunthawat conc1udes that the positive response to demand is strong in cases of demand in manufacturing, banking, insurance and real estate, service and wholesale and retail trade sectors, but particularly weak in the agricultural, mining and quarrying sectors. See Nimit Nontapunthawat, 'Finance Capital Flows and Portfolio Behaviour of Thai Commercial Banks', Journal ofthe National Research Council of Thailand, Vo1.l2, No.l,January June 1980, pp. 1 and 2. 11. Quoted from the Bank of Thailand, Annual Economic Report, 1978, pp. 68- 9. It should be noted that bank lending to BAAC is under item 6, 'banking and other financial institutions', in Table 6.2. 12. See Chusak Himathongkom, 'Accelerated Agricultural Financing in Thailand' and 'Financing of Agricultural and Agro-Based Industry', unpublished work ing papers of Bangkok Bank. 13. Quoted from Thailand Yearbook, 1975~, p. MI. 14. This criticism was in fact more relevant in the past than at present. It was applicable to such banks as Tan Peng Choon Bank, Agricultural Bank and Provincial Bank, which no longer exist. 15. While existing banks need not become public companies, they still have to comply with the regulations on ownership distribution with an allowance of a transitional period. A big shareholder cannot hold more than 5 per cent of total shares of a commercial bank. 16. See the National Executive Council decree No. 58, issued in 1972. 17. See the IndustriaI Finance Cooperation of Thailand, Annual Report, 1978, p. 56; and Bank of Thailand, Statistical Bulletin, September 1979, Table 17, 'Assets and Liabilities of Industrial Finance Corporation in Thailand, 1961-1979', pp. 26-7. 18. See Bank of Thailand, Statistical Bulletin, September 1979, Table 18, 'Assets and Liabilities of Bank for Agriculture and Agricultural Co-operatives', pp. 28-9. 320 Notes and References 19. Quoted from Bank of Thailand, Annual Economic Report, 1977, p. 79. 20. Quoted from Bank of Thailand, Annual Economic Report, 1978, pp. 82-3. 21. At the end of 1978, total deposits amounted to B15,563 million; and savings and premium saving bonds, B1,683 million. The Bank acquired government securities of about B17,602 million. Both the Savings Department and Bank ing Department accept demand and time deposits. See Bank of Thailand, Monthly Bulletin, September 1979, Table 16, 'Assets and Liabilities of the Government Savings Bank', pp. 24-5 and 31; and the Government Savings Bank of Thailand, History and Activities in Brief, 1978. 22. See Bank of Thailand, Annual Economic Report, 1977, p. 83; and Govern ment Housing Bank, Annual Report, 1977 and 1978. 23. Prof. Robinson suggested the following: 1. Tax incentives to public companies and shareholders. 2. Standard accounting and auditing system. 3. Improvement of the efficiency of market management. 4. Control of all financial institutions. See Bangkok Bank, Monthly Review, June 1975, pp. 370-3. 24. Bank of Thailand, Annual Economic Report, 1978, p. 86. 25. The baht was pegged to the US dollar until May 1978, and its value is now fixed daily to a basket of currencies by the Exchange Equalisation Funds of Thailand, in collaboration with commercial banks. The change was intended to produce greater flexibility in the financial system. See Bank of Thailand, Annual Economic Report, 1978, p. 72. 26. See P. B. Trescott, Thailand's Monetary Experience : The Economics of Stability (New York : Praeger, 1971); and T. H. Silcock, Thailand: Social and Economic Studies in Development (Canberra : Australian National University Press, 1967). 27. See Ammar Siamwalla, 'Stability, Growth and Distribution in the Thai Economy', in Prateep Sondysuvan (ed.), Finance, Trade and Economic Development in Thailand, p. 30. 28. See the Commercial Bank Act, 1972, and the First Amendment 1979; National Executive Council Decree No. 58, 1972; Ministry of Finance Noti fications, 1972 and 1978, and Bank of Thailand Notifications for finance and securities companies; Bank for Agriculture and Agricultural CO- Per cent p.a. 1969, 1st qr. -1970, 2nd qr. 40.0 1970.2 -1972.3 11.2 1972. 3 -1974. 1 23.4 1974.1 -1975.4 6.6 1975.4 -1979.3 14.8 See Federal Reserve Bank of San Francisco,Pacific Basin Economic Indicators, June 1980, p. 69. 33. See Bank of Thailand, Statistical Bulletin, September 1919, Table III 13, 'International Reserves', p. 80. In 1911 and 1918, the revaluation of gold holdings at market price may explain this phenomenon of exception. 34. See Bank of Thailand, Annual Economic Report, 1918 Statistical Section, p. 8, Table 6, 'Analysis of Changes in Money Supply ',item (6) foreign assets (net). 35. See Sataporn Jinachitra, 'Factors Affecting Changes in Money Supply in Thailand, 1964-1973', in Prateep Sondysuvan (ed.), Finance, Trade and Economic Development in Thailand, pp. 115-19. 36. See Chaiyawat Wibulswasdi, 'A Study of Demand for New Currency Notes in Thailand', Bank of Thailand Paper No. 2, September 1914; Nimit Nontapun thawat, 'Financial Capital Flows and Portfolio Behaviour ofThaiCommercial Banks', Journal of National Research Council of Thailand, VoL 12, No. 1, January..June 1980; and Sathit Uthaisri, 'Monetary Policy in Thailand: A Test of Its Effectivness', Ph. D. thesis submitted to the University of Illinois, USA, 1973; and Warin Wonghanchao, 'An Evaluation of Thailand'sMonetary Policy in the 1960's', in Prateep Sondysuvan (ed.), Finance, Trade and Economic Development in Thailand, pp. 99-114. 37. See SGV Group, A Study ofCommercial Banks in Thailand, 1978, pp. C7 and C13. Chapter 7 1. Two major devaluations brought the exchange rate to 3.93 in 1962 and to 6.44 in 1970. The exchange rate was managed to float around 1.4 in 1918 and 1979. 2. The first bank in the country was originally called Banco Espanol-Filipino de Isabel II. In 1910, the bank adopted its present corporate name of 'Bank of the Philippine !slands'. Its note issue was redeemed before the Second World War. See Central Bank ofthe Philippines, Ion. 3 1949-Jan. 3,1974, published by the Central Bank on the occasion of its 25th anniversary, 1914, p. 113. 3. Voting shares are limited to 30 per cent and non-voting shares 40 per cent. 4. See Leoncio P. Gonzaga, 'Commercial Banking', The Fookien Times Philippines Yearbook, 1978, pp. 224-1. 5. Information from interviews with both foreign and domestic banks. 6. The laws state that commercial banks are allowed to invest, within certain limits, in equities of warehousing companies, leasing companies, storage com panies, safe deposit box companies, companies engaged in the management of mutual funds (hut not in the mutual funds themse1ves) and banks other than rural banks. All others are excluded. 7. See, for example, the concluding remarks ofEdita A Tau, 'Philippine Monetary Policy and Aspects of the Financial Market : a review of the Literature', an unpublished manuscript presented to the University of the Philippines. 322 Notes and References 8. Both OBUs and FCDUs enjoy the concessionary tax rate of 5 per cent on offshore income and 10 per cent on onshore income. Non-resident depositors' interest income is free from income tax. 9. For a discussion, see Wilfrido C. Tecson, 'Offshore Banking in the Philippines', The Fookien Times Philippines Yearbook 1977, pp. 198 and 204. FCDUs are required to maintain at an times a 100 per cent foreign currency cover. OBUs have to provide the necessary specified currencies to cover liquidity needs. 10. Strictly speaking, in Table 7.3, the years 1960-73 cannot be compared with 1977 and 1978 (see Notes 1 and 2 in Table 7.3). Nevertheless, those f"Jgures taken together can provide a general trend of the relative shares. 11. See The World Bank, The Philippines : Priorities and Prospects for Develop ment, July 1976, Chapter 8, 'Industrial Growth, Employment and Investment'; and Chapter 9, 'The Changing Role of Industry', pp. 186-237. Also Frank H. Golay, op. cit. Chapter XI, 'Industrialization Policy', pp. 241~5. 12. For a detailed explanation, see Financing Agricultural Development : The Action Program (Agricultural Credit Plan CY 1977-82), published by the Presidential Committee on Agricultural Credit, pp. 45-51. See also the World Bank,op. cit., Chapter 6, 'Strategies for Rural Development : Expansion of Agricultural and Fishery Production'; Chapter 7, 'Strategies for RuralDevelop ment : Supporting Services and Infrastructure'; and Appendix A, 'Agrarian Reform', pp. 128--80 and 475-88. 13. The LBP is engaged in f"mancing the acquisition by the Government of agricul tural landed estates that are subsequently sub-divided and sold to tenant farmers on instalment or amortisation basis. The Ministry of Agrarian Re form undertake the allocation of lots and issuance of Certificates of Land Transfer to tenant-4>eneficiaries. See Land Bank of the Philippines, Annual Reports, 1978, p. 6. 14. 'The bank run was triggered by a Senate investigation ofbank malpractices'. Commercial banks and savings banks were hit, particularly the savings banks. After President Marcos imposed Martial Law in September 1972, there was a rush to withdraw deposits for about three weeks. See Central Bank of the Philippines, 1949-1974,p. 123. 15. See Central Bank ofthe Philippines, 1949-1974, pp. 125-38. 16. For a discussion of the development Bank System, see Central Bank of the Philippines, 1949-1974, pp. 120-3. 17. For the consolidated assets and liabilities of all development banks, see Statements of Condition of the Development Bank of Philippines and Private Development Banks, as reported in the Central Bank of the Philippines, Statistical Bulletin, as appendix to the Annual Report 1978, pp. 111-12; and Central Bank ofthe Philippines,Philippines Financial Statistics, December 1979. 18. See Development Bank of the Philippines, Annual Report 1978, pp. 6-17. 19. For a discussion of the savings banking system, see The Central Bank of the Philippines, 1949-1974, pp. 118-20. 20. For the assets and liabilities ofsavings banks, see the 'Statements ofCondition of Savings Banks" as reported in the Central Bank of the Philippines, Statistical Bulletin, Appendix to the Annual Report 1978, p. 107. 21. They are (1) Private Development Corporation of the Philippines (1973), (2) Ayala Investment and Development Corporation (1936), (3) State In vestment House Inc. (1972), (4) Bancom Development Corporation (1965), (5) Investment and Underwriting Corporation of the Philippines (1973), (6) Philippine Americans Investment Corporation (1973), (7) Filcapital Develop ment Corporation (1972), (8) American European Asian Development Notes and References 323 Corporation (1973), (9) Philippine Pacific Capital Corporation (1974), (10) Citicorp Investment Philippines (1974), (11) First Metro Investment Corpor ation (1972), and (12) Philippine Investment Systems Organisation (1974), ranked in the order of their total assets. 22. Actually, only a few met this requirement. For a critical review of the in vestment houses, see Jose Ma. G. Abello, 'Investment Houses : the Search for Relevance and Profits', The Fookien Times Philippines Yearbook, 1978, pp. 220-39. 23. This is a view of A. Gatmaitan, president and chairman of the Investment and Underwriting Corporation of the Philippines, as reported in the Business Day on 21 June 1979 in the 'Special Report of the Investment Houses'. 24. Sour ce of basic data : Central Bank and National Econornic and Develop ment Authority (NEDA). See Private Development Corporation of the Philippines, Philippine Business Review, Vol. XII, No. 3, 3rd Qr. 1979, pp. 2-3. Similarly, the subsequent figures in this sector are from that same source. 25. However, some caution should be taken to interprete the dec1ining ratio. First, data before 1973 were not available, so that we could not observe the trend. Secondly, 1973 was the height of the world-wide boom, so that the financial sector was naturally more active in financing investments than in the subsequent years. Thirdly, after the boom years 1973 and 1974, investors relied increasingly on internal corporate funds and earnings. 26. GDCF was estimated to be1'8,992 million in 1970,1'35,257 million in 1975 and ,1150,915 million in 1978, as compared with ,118,781 million in 1970, 1'29,186 million in 1975 and 1'42,978 million in 1978 for domestic savings. Source: National Economic and Development Authority. 27. Information kindly provided by the Central Bank of the Philippines. 28. See Frank H. Golay, The Philippines : Public Policy and National Economic Development (lthaca: Cornell University Press, 1961), pp. 214-17. 29. For the changes in legal reserve requirements since 1949, see the Central Bank of the Philippines, Statistical Bulletin (appendix to the Annual Report, 1978), p. 4. 30. Quoted from the Central Bank of the Philippines, Annual Report, 1978, p. 5. 31. For a detailed explanation and definition, see Central Bank ofthe Philippines, Circular Nos. 704, 705 and 706, dated 1 December 1979, and also No. 679, dated 28 May 1979. 32. In Figure 7.1, we do not mean that at the equilibrium point the deposit rate is equal to the loan rate. There must be a spread to cover overhead expenses, risk of default and profit margin of banks. We mean that, under free banking, banks can determine their deposit and loan rates and hence the spread accord ing to market forces. This theoretical model can also be applied to other ASEAN countries, such as Indonesia and Thailand, which try to enforce ceiling interest rate system. 33. This is a finding of my interviews with many banks and financial institutions in 1979. 34. For an explanation ofthe monetary policy, see Central Bank ofthe Philippines, 1949-1974, pp. 36-44. 35. Quoted from ibid., p. 44. 36. Quoted from Central Bank of the Philippines, Annual Report, 1978, p. 5. 37. See G. S. Licaros', Governor of the Central Bank of the Philippines, re port on 'the Economic and Financial Developments in 1979', dated 2 January 1980. 38. It was calculated that the peso/US $ exchange rate which would be necessary to restore the price levels in the Philippines and the United States to the 324 Notes and References same relative levels as prevailed in 1971 would be J!9.75 as compared with the current rate of around J!7.40. See 'Philippines Staving Off Devaluation', Asian Monetary Monitor, Hong Kong, May...June 1979, p. 36. 39. For a detailed analysis of the monetary growth on quarterly basis, see Federal Reserve Bank of San Francisco, Pacific Basin Economic /ndicator, June 1980, p.50: Growth rate (per cent) 1969, 1st Qr.-1972, 2nd Qr. 15.2 1972. 2 -1974. 3 26.9 1974.3 -1976.2 12.6 1976.2 -1977.4 21.4 1977.4 -1980.1 13.0 40. See A. Marshall, Money, Credit and Commerce (London: Macmillan, 1923). He had a monetary equation, which had long been forgotten, although his simplier equation (M = k Y) is well-known: M=KY+K'A where A = wealth of the people K' = proportion of wealth held in cash balance Y = income K = proportion of income held in cash balance M = money 41. Quoted from the Central Bank of the Philippines, /949-1974, p. 44. 42. See E. P. Zialcita, 'Money Supply Movements in the Philippines', Philippine EconomicJournal, No. 18, Vol. IX, No. 2 (Second Semester 1970). 43. See J ose Encarnacion and Amado A. Castro, 'A Monetary Sub model of the Philippine Economy, 1950--69', Philippine Economic Journal, No. 22, Vol. XI, No. 2 (Second Semester 1972); Edita A. Tan, 'Considerations for changing the Interest Rate Policy' (Quezon City: UPSE--IEDR), Discussion Paper No. 74-7, 1974; and Edita A. Tan, 'Philippine Monetary Policy and Aspects of the Financial Market: a Review of the Literature', unpublished manuscript presented to the University of the Philippines. 44. Edita A. Tan has strong arguments against artificial segmentation, two-tier interest rates, and credit incentives given to inefficient financial institutions. She asks for deregulation and freeing of the market. See her concluding re marks in the Review, op. cit. Chapter 8 1. Banks have been free to determine their own interest rates on deposits and loans and even to fix their office hours for the general public since 1975. 2. With regard to merchant banking, DBS (50 per cent share) partners Daiwa Securities International Ltd. and Sumitomo Bank to form DBS-.Daiwa Securities International Ltd. to issue securities in the international market: DBS (36 per cent share) partners Morgan Guaranty International Finance Corporation, Industrial Bank of Singapore and A.U.C. Holdings Ltd. (Australia) Notes and References 325 to form the Morgan Guaranty and Partners Ltd.; DBS (35 per cent) partners Nomura Securities Ltd., Sanwa Bank and 1. Ballas & Co. to form the Singapore Nomura Merchant Banking Ltd; and POSB (one-third share) partners the French bank to form the Banque National de Paris (South-East Asia) Ltd., a merchant bank. With regard to discount houses, DBS (45 per cent shares) partners Overseas Union Bank, Morgan Guaranty International Finance Corporation and Australian United Corporation to form the National Dis count Company; POSB (40 per cent share) partners United Overseas Bank, Gilbert Investments Ltd., and Chartered Bank to form the Discount Company, of Singapore. 3. For example, Bank Bumiputera has Kewangan Bumiputera Berhad as the associated finance company; Malayan Banking has Malaysian Finance Cor poration; and United Malayan Banking Corporation has United National Finance Berhad. 4. Malayan Banking and Malaysian Industrial Development Finance Ltd. partner Arab Investment for Asia (Kuwait) to form the Arab-Malaysian Develop ment Bank; Malayan Banking partners EEC banks to form the ASEAN bankers Malaysia; United Malayan Banking Corporation partners Grindlays Bank (UK) and Fuji Bank to form the Asian International Merchant Bankers; Bank Bumiputera partners N. M. Rothschild & Sons and Bank of Tokyo to form the Bumiputera Merchant Bankers; and Malaysian Industrial Develop ment Finance Ltd. and Malayan Banking partner Barclays Bank International and Continental Finance Corporation to form the Malaysian International Merchant Bankers. 5. For example, Singapore International Merchant Bankers Ltd. isajoint venture of Oversea-Chinese Banking Corporation, Continental Illinois of Chicago and Schroders Ltd; Singapore-Japan Merchant Bank is a joint venture of OCBC, Singapore International Merchant Bankers, Yamaichi Securities and Bank of Tokyo; Singapore Nomura Merchant Banking Ltd. is a joint venture of Development Bank of Singapore, Nomura Securities, Sanwa Bank and J. Ballas & Company; United Chase Merchant Bankers Ltd. is a joint venture of United Overseas Bank, Chase Manhattan Bank and Nikko Securities; and Asian American Merchant Bank Ltd., ASEAM, is a joint venture of Overseas Union Bank, Bamerical International and Dai'ichi Kangyo Bank. Wholly foreign owned institutions include Asia Pacific Capital Ud, Baring Sanwa Multi-national Ltd., Dresdner (S.E.A.) Ltd, and Merrill Lynch International Ltd. 6. For example, Wayfoong Mortgage and Finance Ltd. is affiliated with Hong Kong and Shanghai Banking Corporation; Chartered Finance Co. Ltd. is affiliated with Chartered Bank; and Credit Corporation is an Australian con cern. The active local finance companies include Hong Leong Finance Ltd., OCBC Finance Ltd., DBS Finance Ltd. and Sim Lim Finance Ltd. 7. See Bank Negara Malaysia, Money and Banking in Malaysia (Kuala Lumpur), p.76. 8. For a discussion of the industrial groups of foreign investments and invest ments from various foreign countries, see S. Y. Lee, 'Foreign Investment in Singapore', Securities Industry Review, September 1977. 9. See for example, J. G. Gurley and E. S. Shaw, 'Financial AspectsofEconornic Development', American Economic Review, September 1955; E. S. Shaw, Financial Deepening in Economic Development (New York: Oxford Uni versity Press, 1973); R. W. Goldsmith, Financial Structure and Development (New Haven : Yale University Press, 1969); Ronald I. McKinnon, Money and Capital in Economic Development (Washington : Brookings Institution, 1973); 326 Notes and References and Don Patinkin, Money, Interest and Prices (New York : Harper & Row, 1965) (2nd edition); Milton Friedman, The Optimum Quantity o[ Money and Other Essays (Chicago : Aldine Publishing Company, 1970). Don Patinkin focuses on the 'real balance effeet' and Milton Friedman regards money as a 'luxury goods'. 10. For an empirical study of 14-67 countries in the period 1967-1972/3, see Y. C. Jao, 'Financial Deepening and Econornic Grciwth : a Cross-Section Analysis', Malayan Economic Review, April 1976. In his regression equations, he uses the growth rate of per capita real balances (financial deepening) and the M1/y, M2/Y and M3/Y ratios (representing financia1 intermediation) as explanatory variables, and the growth rate of real per capita GDP as a de pendent variable. He concludes that M3/Y has a better performance and that 'econornic growth is associated with the accumulation of financial assets defmed in the widest sense'. 11. Alfred Marshall believed that people held cash balance not only against their income but also against their wealth. See Note 40 in Chapter 7. J. M. Keynes postulates the 'fmance motive' of holding money, i.e. people accumulate cash balance during the interval between borrowing and investment expendi ture. See J. M. Keynes, 'Alternative Theories of the Rates of Interest', Economic Journal, Vol. XLVII, 1937, pp. 246-7. 12. See Census o[ Services, 1974, Vol. 11 (Singapore : Department of Statistics, Oetober 1977), p. 55; and Lee Sheng-Vi, 'The Ro1e of Financial Institutions in the Singapore Economy', in Banking and Finance Supplement of the Business Times, Singapore, 24 February 1978. 13. The Philippine case should be read in conjunetion with Chapter 7, p. 186, in which the definition of the total assets of the finanCIal seetor was much wider. 14. FIR is the ratio of all fmancial assets to national wealth. See R. Goldsmith, Financial Structure and Development (New Haven : Yale University Press, 1969). 15. See the Workshop Paper and Summary 'Co-operation in ASEAN Banking Operation and Development', in the Second ASEAN Banking Conference on 25-8 January 1978. 16. See SGV, A Study o[ Commercial Banks in ASEAN, 1978, pp. Cl, C2, D 1, D2 and E. 17. See the United Nations Report on Econornic Co-operation for ASEAN. The research study was done in 1970-2 and the data were mainly for 1968 or 1969, with projeetions to 1975 and 1980. See Lee Sheng-yi, 'ASEAN Co operation and Regional Development', a paper for the Conference on 'Banking and Finance in the 1980s' on 27-8 October 1977, and later published as a coUection of conference papers by the Institute of Banking and Finance in 1978; and various papers of ministerial meetings, ASEAN Banking Con ferences, ASEAN Banking Council meetings and technical committee meetings. 18. See the Committee Report on the Financing of Agriculture and Agro-Based Industries to the Seventh ABC Meeting in February 1980. 19. See Memorandum of Understanding an ASEAN Swap Arrangement, Article V., 'Amount of Swap'. 20. Ibid, Article III, 'Form of Swap'. 21. Ibid, Article VII. 22. Quoted from the Report of the Permanent Comrnittee on Investment, Trade and Finance, to the 7th ASEAN Banking Council Meeting in Jakarta, 31 January to 3 February 1980. 23. See the Report of the ABA Technical Sub-Comrnittee on 13-14 December 1979. Notes and References 327 24. The UN Report on Economic Co-operation for ASEAN recommended the establishment of an ASEAN Development Corporation. See its Chapter 10, pp. 109-17. Chapter 9 1. See Lee Shen~y~ 'Public Enterprises and Economic Development in Singapore', Malayan Economic Review, October 1976. 2. The problem arises from the two-tier tax rates in Singapore, i.e. offshore in come is taxed at 10 per cent while earnings on loans to residents at 40 per cent. The distinction between offshore and onshore is rather arbitrary. Often bankers and tax officers argue about the definition of offshore transaction. Moreover company income tax is higher in Singapore than in Hong Kong - 40 per cent on 'taxable profit' as compared with 17 per cent on corporate profit. The marginal personal income tax rate in Singapore ranges from 34 to 55 per cent on 'chargeable income' for business executives (annual income from S$50,000-75,000 to over $600,000), as compared with Hong Kong maximum marginal rate of 17 per cent on gross income. 3. Interviews with bankers in Hong Kong and Singapore convey this view. See also Padraic Fallon, 'The Twin Centres of Asian Finance : Hong Kong Forges Ahead', Economy, July 1977, pp. 88 and 92. 4. See Euromoney, July 1977, pp. 89-90, and July 1978, pp. 44-5; and Alvin Tay Tuan Hearn, 'Asian Dollar Market Mobilising Funds for Regional Develop ment', an Academic Exercise of an Honour Year student, presented to the University of Singapore, 1978-80, p. 60. 5. See Lee Sheng-yi,Public Finance and Public Investment in Singapore (Institute of Banking and Finance, 1978), and H. C. Y. Ho, The Fiscal System of Hong Kong (London : Croom Holm, 1979). 6. Interview with the Financial Secretary of Hong Kong. 7. The 'real' growth rates were as follows (per cent): 1967, 7.7; 1972, 9.7; 1977, 9.8; 1968, 4.7; 1973,15.8; 1978,10.0; 1969,14.8; 1974, 1.8; 1979,11.5; 1970, 6.2; 1975, 2.2; and 1980 (forecast), 10.0 1971, 5.0; 1976,18.8; Source: The Budget Statement of Hong Kong, 1980/81, and other official statements. Index Sub-entries under the names of countries are limited in number since Chapters 2-7 follow a broadly similar plan to which the Contents List gives a detailed guide. Fuller entries will be found under subjects (e.g. Banks; Credit arrangements; Inflation; Money supply). Agricultural Bank of Malaysia, Association of Rire Purchase and 109, 110 Finance Companies Agricultural Credit Adminis (Singapore), 61 tration (Philippines), 179 Association of Southeast Asian Agricultural finance Nations (ASEAN), 1 ASEAN cooperative project, 220 attitudes to financialliberal direction in ASEAN countries, isation, 199-202 207-10 bank desk officer exchanges, Indonesia, 132-3 57,218 Malaysia, 109-11 Bankers Acceptances (ABAs), Philippines, 179-80, 182 221-2 Thailand, 152, 157, 159 Banking Council, 218, 219 Asian Bond Market, 52, 71-2, banks' Swap Arrangement, 220 75-7,82,200,206,248 Clearing Union, 221 function of Singapore merchant Finance Corporation proposed, banks,63 222-3 international participation, 76 financial cooperation, 219-23 participation of Post Office insurance harmonisation, 68 Savings Bank, 64 monetary and banking relations, Asian Commercial Papers, 72 216-19 Asian Currency Market, 52, 71-5, possible uses of Asian Currency 247 and Bond Markets, 76-7 demarcation from Singapore role in regional development, banking system reduced, 69- 228-30 70 role of public sector, 202-4 inter-bank sector, 72 Avala Investment Development interest rates, 72, 73 Corporation, 183 link with Euro-Currency Market,71 BAPEP AM, see Capital Market offshore banks, 53, 55, 71 Operation Board (BAPEPAM: Singapore merchant bank Indonesia) activity, 63 BAPINDO, see State Development tax concessions, 70 Bank (BAPINDO: Indonesia) Thai securities firms' activities, Balance of payments 155 Indonesia, 144 Asian Currency Units, 53, 70, influencing financialliberal 73-4 isation, 202 Asian-dollar market, 16, 176,200. Malaysia, 123, 267 206, 225 Philippines, 191, 192; Central 330 Index Balance o[ payments contd. govemmen t involvement, 137, Bank measures, 192-3; factors 204; historical background, influencing, 195 126; mergers encouraged, 130; Singapore, 254 promotion of indigenous Thailand, 161-2, 169 p articip ation, 13 0-1; structure, Bancom Deve10pment Corpor- 127 ation, 177 links between ASEAN countries, Bangkok Bank, 149-50, 152, 153 216-19 Bank Bumiputera, 99-100 Malaysia, 98-103, 255-6, 300-1; Bank Indonesia, 127, 129-31 finance company affiliation, dual ro1e, 130, 137-8 104; govemment shareholdings, Bank Negara Indonesia, 127 203; industrial finance, 107; Bank Negara Malaysia, 98-9 net foreign assets, 123 Bank of Agricu1ture and Agri- Philippines, 173-82,286,303-4; cultura1 Co-operatives (BAAC: call for universal system, Thailand), 148, 153, 157, 159, 174-5; deposits insured, 180; 171 foreign currency deposits, Bank of Ayudhya (Thailand), 153 176; foreign shareholders, Bank of Thailand, 148-9, 152 174; government involvement, monetary contro1 functions, 163 172,175,187,204; mergers, Bank of the Philippine Is1ands, 176, 187; possible links with 173-4 investment houses, 184; Bank Pembangunan Malaysia, reserve requirements, 188-9; 108 rural banks, 1 80-1 ; see also Bank Pertanian Malaysia, 110 Central Bank of the Philippines Bank Rakyat (Malaysia), 109, 11 1 Singapore, 52-3, 55-61, 244-5, Bankers Acceptances (BAs) 299-300; attraction of foreign ASEAN (ABAs), 221-2 banks, 56, 57; characteristics Hong Kong, 17 of operations, 58-9; effect of Malaysia, 119 Asian Currency Market, 75; Banks evolution, 55; fixing deposit exchange of desk officers, 57, and lending rate (pre-197 5), 218 85; four types of licence, 57; foreign, influence in ASEAN free banking policy, 85-6, countries, 204-7, 292-3; 200; leading role in deposits league table, 218-19 and loans, 78;liquidity, cash Hong Kong, 8-14, 233, 234; and loan/deposit ratios, 60-1 ; acquisitions, 236; agreement role of Monetary Authority, on interest rates, 30; asset and 53; special deposit ratio, 86 liability structure, 10-11 ; Thailand, 148-54,277,301-2; foreign exchange activities, 2, decreasing foreign share, 154; 20; govemment intervention monetary control instruments, on credit, 41-2; increase in 163-5; political influence on, deposits, 9; inter-bank money 153,204 market, 17; issuing currency, see also Credit arrangements; 24,38; supervisory bodies, 38 Deposit-taking companies Indonesia, 126-36,268-72; (DTCs) foreign, restrietions on, 127-8; Banque de l'Indochine, 149 Index 331 Bond market, Hong Kong, 19 see Hong Kong, 17 also Asian Bond Market Ma1aysian negotiab1e, 119 Borneo Deve10pmen t Corporation, Singapore negotiab1e, 58 109 US dollar in Asian Currency Borneo Housing Mortgage Finance Market, 72 Berhad, 112 Certificates of Indebtedness, 24, Brunei 25 currency equiva1ence with Chartered Bank Group (Hong Singapore, 54 Kong), 15,31,149 currency separation, 51 in Malaysia, 100 Building societies Chettiars, 68 Singapore,68 China see also Property credit obtained from Hong Bumiputeras, 10ans to, 116 Kong,34 from Deve10pment Bank of deposits of nationals in Hong Malaysia, 108 Kong banks, 10 see also Bank Bumiputera importance to Hong Kong's financia1 future, 50 reorientation of policies, 7 Capital Assistance Scheme Citibank (Hong Kong), 17 (Singapore),89 City Trust Banking Corporation Capita1 Market Operation Board (Philippines), 174 (BAPEPAM: Indonesia), 136 Commodity dealing, interest of Capital Market Policy Council Singapore merchant banks, 63 (Indonesia), 136 Coop era tives Capital Markets agricultural, in Malaysia, 110 Hong Kong, 17-19 in Indonesia, 128-9, 133 Indonesia, 136 Council of Trust for Indigenous Malaysia Stock Exchange, 113 Peop1e (MARA: Malaysia), 111 Philippines, 185, 191 Credit arrangements Singapore, 53, 76-8, 82 commercia1, in ASEAN Thailand, 160, 171 countries, 211 see also Equities Hong Kong, 33-4, 241; govern Cebu Stock Exchange. 185 ment's influence, 41-2; Central Bank of the Philippines, inflationary effects, 40-1 173 Indonesia: BAPINDO 10ans, contro1 measures in 1950s, 192 134; credit schemes avai1ab1e, discount privilege of rural banks, 132; from Bank Indonesia, 180 130; sector preferences, 132, supervision of institutions, 191 140; tight contro1, 131, 140 Technica1 Board for Agri Malaysia: from banks, 101-3, cu1tural Credit, 179 257; guide1ines, 101-2 Central banks, degrees of depen Philippines, 178-80; direction dence on, 199-200 ofloans, 187-8, 287-8; 10ans Central Provident Fund from rural banks, 181 (Singapore), 53, 65-6, 78-9, Singapore: abolition of credit 84 allocations, 87; changing com Certificates of deposit (CDs) position of bank 10ans, 59, 332 Index Credit arrangements, Singapore contd. of Singapore: contribution of 246; use of overdrafts for Central Provident Fund, 60; financing, 59 role of Monetary Authority, Thailand, 149,278; expansion 53 in mid-1960s, 165; for agri role of Hong Kong and ASEAN, culture, 152; from finance 228-30 companies, 155; in dust rial significance of currency ratio, credit, 156, 159; inflexibility 29 of system, 164 Employees Provident Fund Credit Guarantee Corporation (Malaysia), 112, 113, 122 (Malaysia), 11 2 Equities Currency ratio, 29 growth of the market, 17-18 Hong Kong, 28-9 investment by Singapore financial institutions, 66 Danareksa, P.T., 136 see also Capital markets Deposit-taking companies (Hong Eurocurrency Market (ECM), 71 Kong), 12,235 Thai securities firms' activities, borrowings from banks abroad, 155 13 Eurodollar market, 16, 30, 44 comparison with banks' balance Exchange Banks Association sheet, 13 (Hong Kong), 20,42,49 foreign exchange activities, 20 Exchange controls, 226 increased 10ans and advances, gradual relaxation in Singapore, 33 92 inter-DTC money market, 17 Exchange Fund, 24, 25,38,41 not signatories to banks' interest Exchange rates rate agreement, 31 Hong Kong dollar: floated, 32; supervisory bodies, 38 index fluctuations, 32; pegged tightening control on, 48 to sterling, 31-2, 38; pegged Development banks to US dollar, 32; problems Indonesia, 134-5 for long-term stability, 43-5; Malaysia, 108 reasons for weakness in late Philippines, 173, 179, 181-2 1970s, 32-3; stabilisation Singapore, 53, 203 functions, 38 Development finance Indonesia, 141-3,201; compli Indonesia, 135 cated structure, 143; Rupiah Philippines, 181-2 floated,139 Development Loan Fund (Hong Malaysia, 118 Kong), 15, 16 Philippines, 173, 188, 192 Discount houses Singapore, 89-92 Malaysia, 112 Thailand: miltiple rate system, none in Indonesia, 133, 137 149; pegged to US dollar, 16 I Philippines, 176-7 Singapore, 53,68 Farmers' Aid Fund (Thailand), Thailand, 160, 170 157 Farmers' Organisation Authority Economic growth (Malaysia), 109, 111 of Hong Kong, 7-8 Federal Agricultural Marketing Index 333 Authority (FAMA), 111 Hong Kong, 19-21 Federal Industrial Deve10pment forward market, 20-1,44 Authority (FIDA: Malaysia), 108 Gold Exchange of Singapore, Federal Land Deve10pment 53,68-9 Authority (FELDA: Malaysia), Government Housing Bank 109, 110 (Thailand), 148, 153, 158 Federated Ma1ay States, 51 Government intervention, 202 Finance houses Hong Kong, minimal amount, Malaysia, 99, 103-5; industria1 22 finance, 107 Indonesia. 202 Philippines, 1 84 Singapore, 202 Singapore, 53, 61-2; rates Government Savings Bank compared with banks, 62; (Thailand), 148,153,157-8 role in economy, 79 Government securities Thailand, 154-5; diverting Indoneda, 130, 137, 139 deposit funds from banks, Philippines, 177, 191 167 Singapore, 78, 83-4 see also Deposit-taking Thailand, 151; few Treasury companies (DTCs: Hong Kong) bills issued, 164, 170-1 Financial structure Government Service Insurance changes resulting in inflation, 4 System (Philippines), 185 criticism of 'shallow finance', 2-4 Hire purchase financial deepening, 294-5 ; in Indonesia, 128 effects of, 211-16 in Malaysia, 105 foreign banks and institutions, in Singapore, 62 204-7 Horne Ownership Fund (Hong Hong Kong, 8-23,243; Kong), 15, 16 indicators of financial deepen Hong Kong, 7-50 ing, 21-3,47,237 areas requiring improvement, 47 indicating stage of economic as finandal centre, 224-8 development, 198,291 financial structure, 8-23 Indoneda, 126-38,272 four stock exchanges, 19; Malaysia, 98-116 mandatory amalgamation, 48 Philippines, 172-88, 284-5 increasing importance in 1970s, Singapore, 52-81 1,7,47 Thailand, 148-61 'middle income country' status, wide variety exc1udes single 5 model, 4-5 monetary policies, 23-46 First Bangkok City Bank, 153 population increases, 8 First Metro Investment Corpor role in regional deve10pment, ation (Philippines), 183 228-30 Fisheries Development Authority tax advantages over Singapore, (Malaysia), 111 70 Foreign banks, 204-7 Hong Kong and Shanghai Bank, in Hong Kong, 9, 14 31,149,224 Foreign exchange markets in in Malaysia, 100 334 Index Hong Kong Bank Group, 15 Malaysia: reduced impact, Hong Kong Building and Loan I 18- I 9 Agency Ltd, 15, 16 moderate policies of less devel Hong Kong Credit Insurance oped countries, 4 Corporation, 16 Philippines, 1 91, 193; associated Hong Kong Fintracon Ud, 16 with monetary growth, 195 Singapore,82 Income, ratio to money supply Thailand, 168-9; control tactics, Hong Kong, 29-30 161,165 Indonesia, 145-6 Insurance companies Philippines, 194 Hong Kong, 14-15; legislation, Singapore, 93-4 48 Thailand, 167-8; reacting on Indonesia, 129 balance of payments, 170 Malaysia, 99, I 12 Indian banks in Malaysia, I 00 Philippines, 185 Indonesia Singapore, 53, 66-8, 79; fate of foreign banks, 205 functions, 67; US and UK few government securities dominance, 67 issued, 130, 137, 139 Thailand, 158 financial structure, 126-38 Interest rates Five Year Development Plans, flexibility as adjustment mech 138 anism,37 'Iow income country' status, 5 Hong Kong, 30-1, 239-40; monetary poIicy, 138-46 banks slow to move, 40; peripheral financial institutions, interaction with trend ex 128 pectations, 45; need for resources, I review, 49 Industrial Development Bank of in Asian Currency Market, 72, Malaysia, 108 73 Industrial finance Indonesia, 200, 273, 274; of direction in ASEAN count ries, Bank Indonesia, 129; of petty 210-1 I traders' banks, 128; to mobilise in Malaysia, 107-9 private savings, 140-I in PhiIippines, 178-9 Malaysia: commercial banks, in Thailand, 152 II8; Industrial Finance Corpora ti on finance companies, 105; of Thailand (IFCT), 148, merchant banks, 106 156-7,159,171 PhiIippines, 189-90,201 Industrialisation, in Hong Kong, related to economic growth, 4 23 Singapore, 82, 93, 250; on Inflation Central Provident Fund Hong Kong: average annual accounts, 65-6; on govern rate, 8, 242; govemment's ment securities, 84; on Post initial failure to act, 39-40; Office Savings Bank accounts, influence of money supply, 64-5 34-7 Thailand, 161-2, 164,201,279- Indonesia, 138-9; reduced by 80 devaluation, 142-3 International Monetary Fund, 9 I Index 335 Investment relationship with Singapore, 51 Singapore: investment allow resources, 1 ance scheme, 88; of insurance State Economic Development company funds, 67 Corporations, 109 Thailand: geographica1 im status in world league, 5 balance, 151, 159-60 Stock Exchange, 113 Investment and Underwriting Malaysia Building Society, 111 Corporation of the Philippines, Malaysia Discount Ud, 112 183 Malaysia Export Credit Insurance Investment finance corporations, Berhad,112 128, 133, 135 Malaysian Industrial Deve10pment Investment houses Finance Berhad (MIDF), basic functions, 183 107-8 Philippines, 176-7, 183 Industrial Consultants (MIDFIC), 107-8 J akarta Stock Exchange, 136 Malaysian Industrial Estates, 108 Malaysian International Bankers Krung Thai Bank, 149-50, 152, Ud (MIMBL), 108 153, 156 Manila StOl:k Exchange, 185 Market forces, influence in Land Bank of the Philippines, ASEAN countries, 202 176, 179 Mass Transit Railway Corporation Leasing finance, in Malaysia, 105 (Hong Kong), 17, 19 Loans, see Credit arrangements; Merchant banks Money markets Hong Kong, see Deposit-taking Lotteries Fund (Hong Kong), 15 companies (DTCs) Indonesia, 128 MARA, see Council of Trust for Malaysia, 99,105-7; industrial Indigenous Peop1e finance, 107 Makati Stock Exchange, 185 Philippines, 183 Ma1ayan Banking, 99-100 Singapore, 53, 63, 79 Malaysia, 98-125 Thailand,155 Currency Split (1967), 98 Metropolitan Stock Exchange, effect of export economy on 185 policies, 116-17, 118 Monetary assets, as indicator of expansionary budgets (1977-8), financial deepening, 21 119 Monetary policy financialliberalisation, 201 Hong Kong, 23-46; interest financial structure, 98-116; rate/exchange rate/aggregate relative importance of insti- demand relationships, 45-6; tutions, 113-14,258-62 need for firmer management, gold and foreign exchange 48-9 reserves, 99 Indonesia, 138-46; instruments, gold parity of dollar maintained, 139-41 118 links between ASEAN countries, govemment intervention, 202 216-19 historical background, 51 Malaysia, 116-24; instruments, monetary policy, 116-24 117 336 Index Monetary policy contd. to income, 167-8, 282;instru Philippines, 188-97 ments and policy, 163-7; Singapore, 81-97; international trend growth rates, 167 aspect, 89-92; monetary Mutual Fund Company (Thailand), growth rate, 83; stabilisation 155 efforts, 82 Thailand,161-71 National Cottage Industries Bank wide variety excludes single (Philippines), 185 model,4-5 National Economic and Develop Money brokers, international, 53, ment Authority (Philippines), 68 173 Money Markets National Investment Company Hong Kong, 16-17 Ud (Malaysia), 113 Indonesia: inter-bank, 133; National Savings Bank (Malaysia), problem of dualism, 137 112-13 Malaysia: merchant bank activities, 106 Pension funds Philippines, 177, 185 Central Provident Fund Thailand, 161 (Singapore), 53, 65-6 Money shops in Philippines, 175 in Hong Kong, 1 5 Money supply in Malaysia, 113 determinants of demand, 94 Philippine Amanah Bank, 184-5 effect of balance of payments Philippine-American Finance on change, 195-6 Commission, 188 Hong Kong: changes in money Philippine Commercial and stock, 27-8, 238-9; deter Industrial Bank, 175 minants and behaviour, 26-30; Philippine Deposit Insurance influence on inflation, 34-7; Corporation, 180 ratio to income, 29-30; Philippine National Bank, 173, regulation, 38-9 175,176,179,182 Indonesia, 143-6, 274; com Philippine National Co-operative pared with income, 145-6, Bank,185 275; high growth rates, 138-9 Philippine Veterans Bank, 175 MI redefined in 1971, 28 Philippines, 172-97 Malaysia, 120, 263; determi financial structure, 172-88 nants, 122-3,266; ratio to government intervention, 202 GNP, 121, 264;structural monetary policy, 188-97 change in components, 123-4 participation in Asian Bond Philippines, 193-5, 289; control Market,76 instruments, 188-91; related proc1amation of martiallaw, to income, 194, 290 193 Singapore, 92, 251 ; effect of resources, I propensity to import, 93; in status in world league, 5 crease in 1970s, 87-8; instru Philippines Monetary Board, 173 ments of control, 83-7; link Pilgrims Management and Fund with income, 93-4, 252-3; Board (Malaysia), 113 role of Monetary Authority, Post Office Savings Bank 53 (Singapore), 53, 63-5, 84, Thailand, 281; growth relative 203 Index 337 deposit-taking advantages, 65 Siam Commercial Bank, 149, outstanding increase in de 153 posits,64 Singapore, 51-97 post-colonial changes, 64 arguments on deva1uation role in economy, 79 (1967 onwards), 90 Postal Savings Bank (Philippines), changes in financial system, 82 182 Commissioner of Banking, 87 Prices currency backed by gold, 54 in Malaysia, 122 Currency Board, 27,52-5,79, in Thailand, 168 87,225 Product Development Assistance currency equivalence with Sehe me (Singapore), 89 Malaysia and Brunei, 54 Property Currency Split with Malaysia, credit in ASEAN countries, (1967),51,54,91 211 deve10pment as financial centre, Hong Kong, 43 69-71,200,224-8; liberty Indonesia, 128 for foreign banks, 206: social Malaysia, 105, 111-12 cost, 73, 75 Singapore,65 Development Bank loans, 75 Thailand, 152, 158; credit Economic Development Board, foneier companies, 155 75 Public expenditure financial structure, 52-81, 243 Hong Kong: calls for restrie government intervention, 202 tions, 41 government securities, 78, 83-4 Malaysian pattern, 122 industrial status, 1 Singapore: finance from investment allowance scherne, 88 Savings Bank funds, 65 Public sector 'midd1e income country' status, role in financial system, 202-4 5 Singapore: small bank lending Monetary Authority (MAS), 52, tO,96 53,76-9,87,225; manage ment of floating Singapore Quantity Theory of Money, 36 dollar, 90-1 ; plan to merge with Currency Board, 53; Sabah Credit Corporation, 109 re discount rate, 85, 88 Sabah Development Bank, 109 monetary policy, 81-97 Savings banks problems posed by open econ Indonesia, 128, 135 omy,80 Malaysia, 112-13 relationship with Malaya, 51 Philippines, 182 role of financial institutions in Singapore, 53, 63-5, 79, 84, 203 economy,78-80 Thailand, 148, 153,157-8 strong foreign reserves, 91-2 Securities companies, in Thailand, time zone advantage, 69 154-5 variations from other ASEAN Securities Industry Council countries, 199 (Singapore), 77, 82 Sinpinyo Funds project, 155 Security Bank and Trust Company Skill Development Fund project (Philippines), 174 (Singapore), 88 338 Index Small Industries Finance Office Teachers Provident Fund (SIFO: Thailand), 156, 159 (Malaysia), 113 Small Irulustries Finance Scheme Thai Farmers Bank, 149-50, 152 -- (Singapore), 89 Thai Investment and Securities Social Security Organisation Company Ltd, 155 (SOCSO: Malaysia), 113 Thai Military Bank, 153 Southeast Asia, previous studies Thailand,148-71 on,2 financial structure, 148-61 see also Association of South government intervention, 202 East Asian Nations (ASEAN) monetary policy, 161-71 State Development Bank resources, 1 (BAPINDO: Indonesia), 134-5 status in world league, 5 Sterling devaluation (1967), 89 Unfederated Malay States, 51 reduction of Hong Kong external Union Bank of Bangkok, 153 reserves, 24-5 Unit trusts, in Hong Kong, 15 Sterling Area, 92 United Asian Bank, 100 exclusion of Hong Kong, 19,24 United Malayan Banking, 99-100 Sterling Guarantee Scheme, 24-5 United States dollar devaluations Stock Exchange of Singapore, 53, decisions on Singapore dollar, 76,77-8,82 90 Stock Exchange of Thailand, 151, effect on Hong Kong interest 160 rates, 30 Straits Settlements, 51 Taxation, relevance for financial centres, 226