Malaysia in the 1980s and 1990s was a big privatization story embracing infrastructure projects from roads and bridges to tollroads. The financial crisis of 1997-98, however, exposed the weakness of some of the privatizations that had already taken place. Bankers found that many of the projects did not meet the forecasts that had been made and, worse still, were in many cases unbankable. Their concerns about balance sheet erosion quickly heightened.
Many of the large infrastructure projects were non-recourse financing deals. That meant if a project could not meet its targets, the banker could only take charge of the asset, and not demand additional recourse from the holding company. Taking assets...
