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Hong Kong Raises Alarm Over Rising Credit Card Defaults - 2003-02-24


Hong Kong's monetary authorities are raising the alarm over rising credit card defaults, while foreign investments in Pakistan doubled from a year ago. Hong Kong officials are concerned about the territory's rising defaults in credit card debt. The Hong Kong Monetary Authority or HKMA, the territory's de facto central bank, reported that the percentage of credit card debt gone bad has risen to 13.25 percent. This is more than double the level of the previous year.

HKMA chief Joseph Yam told a legislative inquiry that Hong Kong banks have been writing off some $256 million in bad debt each quarter. It is a problem, and it is a problem that has to be resolved through the sharing of credit data for individuals and this is being pursued, and I think this will help in the end, he said.

In China, the bad debt picture is somewhat more positive. The central bank says total non-performing loans at the country's top four state banks fell nearly five percentage points last year - or some $9 billion.

China's banking system is saddled with billions of dollars of unpaid debts after years of forced lending to state-run enterprises. The government has implemented measures to hasten the clean up of the banking system, including the creation of four asset management companies charged with disposing bad loans.

A government investigation is underway against one of South Korea's largest conglomerates, SK Corporation. SK chairman Chey Tae-won was placed in custody on Saturday while prosecutors seek a warrant to arrest him on charges of illegal stock transactions.

Analysts see the probe as a reflection of the incoming government's tough stance against bad corporate governance by South Korea's family-run conglomerates, called chaebols. Irresponsible business activities by the chaebols were blamed for Korea's financial crisis in 1997.

The Pakistani government said foreign direct investments in the country doubled to nearly $600 million in the first seven months of the fiscal year, which ends in June. The government attributed the growth to political stability.

The United Arab Emirates invested the most in Pakistan, followed by the United States. Pakistan is hoping to attract $1 billion in foreign investment for the next fiscal year.

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