I shall keep my comments mainly therefore to what the new government should do, be it really a new government or just the old one in a new bottle, and I shall refer only to the present or historical developments only in so far as it is necessary to understand future recommendations. As this is an after lunch speech, I shall also keep it short and not try to be comprehensive, but only comment on things that interest me or I think might be useful to the audience. Let’s start with a simple concept, the Credit Bureau. One of the reasons the NPL could become so high, and banks with high NPLs could remain supported by the public, is because in the present law the concept is that financial transactions are secret and banks are secret places, looked after and owned and supervised by responsible people. It would be nice if it were true, but the banking industry is leveraged by a ratio of 12:1 and the temptation is rather great for the owner to take advantage of other people’s money, people who have no right to know what is going on with their money even once a year because they are not shareholders but just depositors. The temptation of the supervisors to evade their responsibilities by not taking the correct action is also great, as rich people are powerful, and bad political systems over a long time do not help to make you brave. This philosophy must be changed.
Again in the same vein, resources must be made available for farmers to better their production methods or change the nature of their farming so that costs can be reduced or farmers can change to more valuable products needing bigger investments or having larger gestation periods. No doubt in doing this, old debts, being quite considerable and pervasive, will also have to be looked at. In industry, the problems and the roles of the SMEs are obvious. There is no major industrial economy without SMEs. I would say that over half the SMEs are NPL. And a lot of the owners have abandoned their old companies because they don’t need historic records or quota, for instance. They could assume some other identity and live another life and become SMEs again in a not too difficult way, but it is a big burden on the banks. A lot of SMEs can’t do that because they need past performance records. Efforts to prod these SMEs into viability are obviously going to need some government assistance. The problem is too big for commercial banks to handle alone. 3  BIS Review 108/2000  The government has made some efforts in improving the technology, marketing and management of the SMEs. How well it has done this depends on who you ask and I am not really in the field of the SMEs well enough to know the generality of what most people are thinking.