1,0 Introduction Pengurusan Danaharta National Berhad is the institution that our group to research and analysis.

We had been analysis on its history which how the journey of this company and why the institutions was set up by government. Hence, we also analysis its structure of the institution which included the board director and its portfolio and function in this institution. Most importantly we had research the functions of this institution and its growth and performances since it was incorporated in the financial crisis 1998. Hence, we had been research this institution and gave our opinion and perspective on its contributions and its impact to our nation. Lastly, we had been diagnosed there are several effects on its implementation towards the other party. In addition, Danaharta had to face the public relation which was challenge to the institution in other to resolve the NPLs problem. 2.0 History The creation of the Danaharta institution started with Asian financial crisis started in May 1997, the crisis swept the region when it was least expected and left seemingly irreparable effects on the economies. Malaysia also affected from the crisis and spill over into the financial system. Then, the banking industry was significantly affected by the crisis. Banking system had the problem of Non-performing loans (NPLs). Non-performing loans can lead to efficiency problem for banking sector. According to Wheelock and Wilson (1994) in Yixin Hou (2011 ), It is found by a number of economists that failing banks tend to be located far from the most-efficient frontier because banks dont optimize their portfolio decisions by lending less than demanded When, its began to rise as deteriorating finances of distressed borrowers and soaring interest rates impaired borrowers ability to service loans. In addition, the collapse of financial and property asset values substantially reduced the value of the collateral for many bank loans. As a result, most financial institutions experienced erosion in profits. The financial institutions capital base was also affected by increased losses from loan defaults, requiring them to seek recapitalization. Malaysian Government had plans to address the distractions of rising NPLs and other effects of the crisis. The Government recognized that the regional crisis would deteriorate further rather than improve. So, it established the National Economic Action Council (NEAC) on January 7 1998, to deal with the crisis and prevent the economy from sinking into a deep recession. The NEAC prepared the National Economic Recovery Plan (NERP), which contained measures to guide the country out of the deepening financial crisis and towards economic recovery. Through the NERP, the Malaysian Government instituted both short-term and longterm measures to deal with the contagion effect of the Asian economic crisis. The NERP had six objectives, one of which was to maintain financial market stability (Victor Wee, 1999). To resolve the NPL problem in the banking sector, the Government established Danaharta in June 1998 as a pre-emptive measure to purchase NPLs from banking institutions. Danaharta was incorporated on 20 June 1998 to tackle the NPL problem that arose during the Asian financial crisis. Danahartas Objectives were twofold which was to remove the distraction of managing NPLs from the financial institutios so as to allow them to concentrate on lending to support economic growth. Other objective is to maximize the recovery value of the NPLs in its portfolio. Its main objectives were to remove the NPL distraction from the financial institutions and thereafter extract maximum recovery value from the NPLs. The NPL resolution agency, euphemistically known as the national AMC, was established as a pre-emptive measure to avert
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a collapse of the banking system. As with most national AMCs in the world, Danaharta is a finite life agency. It will have been in operation for seven and a half years by the time it winds down its operations on 31 December 2005, having achieved its NPL recovery mission (Danaharta Final Report, 2005). After that the Prokhas was established. Prokhas is a private limited company whollyowned by Minister of Finance Incorporated, we were entrusted initially to manage the residual assets of Pengurusan Danaharta Nasional Berhad and its group of companies. Today, we have transcended our own expectations and have broadened our services into various industries. Our core function has extended to that of advisory and consultancy services where we have served major public entities to adapt the best practices in the industry and mould it into their own organisational framework. Prokhas help Danaharta to collect balance from other borrower. Since 2010, Prokhas has been collected Rm RM2.92 bilion ( Prokhas, n.d). Based on its history, we think that Malaysia had planned a good strategy to manage the NPLs by set up Danaharta. Danaharta has good approach when it chose the AMC approach to remove the NPLs from the financial institutions and make the institutions more well functioning. Even though the Danaharta was the ad hoc company, it was successfully gave the full of energy to resolve the financial crisis and banking system problem. Although it was a short period company with the duration of its creation only 7 years, it has achieved its mission. The task has been continued by Prokkhas that was established to help the company to collect the balance of other NPLs. 3.0Function Danaharta was established with two main functions. First which are to remove the distraction of managing NPLs from the financial institutions. Second, to maximize the recovery value of the NPLs in its portfolio. Two main function was to overcome the Non performing loans so that the Financial intermediaries would focus on giving loan to other potential borrowers. Then, it was also a way to recover the financial crisis and strengthen the economic. The two function can able strengthen the banking system and able to improve the economics (Danaharta Final Report, 2005). Danaharta chose to adopt an asset management company approach. It proposed to deal with the NPLs in its portfolio on an account by account basis, choosing the recovery strategy that would reap the best recovery value in each case. This was due to two key factors that were peculiar to the Malaysian banking sector. First factor was a significant proportion of NPLs suffered from structural issues and required a resolution of the business rather than just the loans. This was due to the fundamental problems of the business, or the industry in which the company operated, or the financing structure of the borrower. Seconds, 70% of the banking systemss NPLs valued at RM 5 million and above. The number of accounts then that were above RM5 million in value was also relatively small, between 2,000 and 3,000 accounts. The number of borrowers was even smaller as some borrowers had multiple accounts. The relatively small number of accounts and borrowers made it feasible for Danaharta to adopt the true AMC approach, as it was able to actively manage the NPLs on an account by account basis. It also allowed Danaharta to extract maximum recovery from each account (Danaharta Final Report, 2005). The Danaharta Act, passed by Parliament in August 1998, provided the legislative framework for Danahartas operations and gave Danaharta special powers to undertake its
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unique mission. The powers were important because it allowed Danaharta to work quickly and more efficiently. The act conferred upon Danaharta three special powers. First, The ability to buy assets through statutory vesting. This was essential to enable Danaharta to acquire assets with certainty of title and maximise value. Second, The ability to appoint Special Administrators to manage the affairs of distressed companies. Third, The ability to sell foreclosed assets quickly ( Pengurusan Danaharta Nasional Berhad Act, 2006). Before Danaharta can buy an asset, it must agree on the terms of the acquisition with the seller. If, for example, Danaharta wants to buy an NPL, it must first agree on the terms and conditions of the acquisition (including price) with the selling bank. Once those terms and conditions have been agreed by both parties, they can then proceed with the acquisition. The Danaharta Act allows Danaharta and the selling bank to effect the acquisition by way of statutory vesting. On completion of the acquisition, Danaharta will issue a vesting certificate to evidence the acquisition. The vesting certificate will then be used for purposes of registration. Thus, for example, upon presentation of the vesting certificate at the Land Registry or Land Office, the Registrar of Land or Land Administrator will record Danaharta's interest as the new charge in place of the selling bank ( Pengurusan Danaharta Nasional Berhad Act, 2006). Danaharta had the right to appoint a special Administrator over a corporate borrower, or a subsidiary or a security provider, or a company whose shares were charged to Danaharta or security provider or company whose shares were changed to danaharta. If the borrower was unable to pay its debts or fulfill its obligations. In addition, danaharta had to be satisfied that the appointed would maximize value or was in the public interest. Danaharta had to seek the approval of an oversight committee before a special administration appointed. Once appointed, the Special Administrator would take over the control and management of the assets and affairs of the company under administration (Danaharta Final Report, 2005). In a nut shell, the Danaharta has two objectives and has a special power to achieve objectives. In addition the act makes the Danaharta work efficiently which it can able to buy the NPLs from the financial crisis. It was proven by Prema Chandra Athukorala (2010), by mid2000 Danaharta had successfully carved out bad debts to the tune of $12 billion or 42.2 percent of total NPLs of the entire banking system. Danaharta seemed to have served as a fairly effective policy instrument in removing and resolving NPLs and in asset recovery. The strong political backing by government, special legal powers by act, coordinated bank restructuring strategy and sufficient financial support all contributed to the efficient operations of Danaharta.

4.0 Structure Danaharta was established at lightning speed, only within three month, the Danaharta Act was drafted and passed in Parliament and finally was incorporated on 20 June 1998 after the announcement of its creation in May 1998 as a public company under Companies Act 1965. Therefore, the success of any organization depends on their management and administration as well as with Danaharta. The successful of Danaharta because of its have a productive and effective board member since it was established. Danahartas Boards featured influential and also well-known figures, whose very professionalism was well respected. The board of directors of the Corporation in Danaharta, which shall beresponsible for the policy and general administration of the affairsand business of the Corporation, shall comprise the followingmembers who, notwithstanding the provisions of section 128 of the Companies Act 1965, shall be appointed by the Minister. Therefore, the board of directors (1998 - 2005) consists of: (a) A non-executive Chairman (with tenure); Raja TunMohar Raja Badiozaman(25 August 1998 - 31 July 2001) Dato' Mohamed AzmanYahya (1 August 2001 - 31 July 2003) Dato' Zainal A Putih (1 August 2003 - 31 December 2005) (b) A Managing Director (with tenure); Dato' Mohamed AzmanYahya (20 June 1998 - 31 July 2001) Dato' Abdul Hamidy Hafiz (1 August 2001 - 30 June 2003) Dato' ZukriSamat (1 July 2003 - 31 December 2005) (c) A Management team (with position) Dato' Abdul Hamidy Hafiz as a Director Operations Division Mr. Andrew Phang Tuck Keong as a Joint Company Secretary and also as a General Manager for Legal Affairs Division and Legal Affairs & Risk Division. Dato' Derrick Fernandez as a General Manager, Danaharta Managers SdnBhdSenior General Manager and Corporate Debt Restructuring Division. Mr.EeKok Sin General Manager as a Finance & Services Division. En. Shariffuddin Khalid as a General Manager Communications & Human Resources Division. Puan Fatimah Abu Bakar as a General Manager Internal Audit & Compliance Division. Dato' ZukriSamat General Manager as a Operations Division and DirectorOperations Division. En. FazlurRahmanEbrahim as a General Manager DanahartaUrusSdnBhd and General Manager 1 for Operations Division. Mr.RavindranNavaratnam as a General Manager Corporate Services Division. Mr. Ramesh Pillai as a General Manager Risk Management Division and Seconded to Bank Negara Malaysia. Dato' Mohd Bakke Salleh as a Director Property Division and Seconded to LembagaTabung Haji. Dato' Johan Ariffin as a General Manager Property Division and Senior General ManagerProperty Division.
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Mr. Eric Kew Ngai Yin as a General Manager Corporate Services Division. Datuk Kris Azman Abdullah as a General Manager 2 for Operations Division angGeneral Manager for Loan Restructuring. Mr. Richard Kong as a General Manager Loan Management. PuanMyrzelaSabtu as a Head Property Division.

The institution complete with the human resources that help the institution to implement its function. Human resources complete with the experts in manager in finance, property, risk manager and lawyer. Danaharta recruitment conditions of high need and quick specific. This is because, the scope of work Danaharta not easy and requires a high capacity to bear it. In addition the main board of this company was hire and intervene by ministry of finance. All the human resource are professional in handling such difficulty situation.

5.0 Performance and Achievement

(Source: Danaharta final report, 2005) The table was the summary of the growth and its performances. Danahartas goals were not profit-oriented but to relieve NPL pressure and maximise recovery values. Based on final report Danaharta, Danahartas mission status in June 1998 to march 2000 is received share capital from goverment RM 3 billion and issued goverment guaranteed bonds (face value) RM 11.4 billion. In September 1998 to Disember 2001, total Loan Rights Acquired (LRA) RM 19.71 billion but purchasing price for Danaharta is RM 8.94 billion (54.6% average discount). Meantime, Danaharta received NPLs to be managed on behalf of goverment RM27.97 billion in total LRA but cost to Danaharta is zero. Morever, implemented recovery strategies during Danahartas life span is RM30.35 billion and overall recovery rate is 58%. This include total cash collected from residual recovery assets such as securities, properties and restructed loans.
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For non cash assets, Danaharta converted to cash/residual recovery assets that value RM3.66 billion. This amount of money was going conversion effort till December 2005 and still remaining as residual recovery assets to be handed over to PROKHAS Sdn Bhd to manage it. In the sama time, total cash recovery collected to date is RM26.69 billion. So, Danaharta distributed recovery to goverment or surplus recovery to financial institutions in RM 17.48 billion. Acquired NPLs total distribution of surplus recovery is RM 0.76 billion cash and 66.5 million unit securities. The performance of Danaharta since 1998 until 2005 was quite impressive. The Danaharta NPLs portfolio comprised RM 19.71 billion of acquired NPLs from over 70 financial instituitions and RM27.97 billion of managed NPLs which Danaharta was managing on behalf of the goverment and BNM. At the same time, danaharta expects to recovery RM30.35 billion from the RM52.42 billion NPLs in its books, which translates to a recovery rate od 58%. Of the total recovery received, RM19.28 billion was from the Managed NPLs component whilst RM11.07 billion was from the Acquired NPLs component. Until 30 September 2005, Danaharta had received RM30.35 billion in recovery. It recovery comprised RM26.69 billion cash and RM3.66 billion worth of residual recovery assets such as non-cash assets ( Danaharta Final Report, 19982005). In the nutshell, the recovery shown that the Danaharta had been functioning to solve the NPLs problem because it can able to acquired the NPLs and managed the NPLs. Up to 30 September 2005, Danaharta made a consolidated net profit of RM0.85 billion. This was mainly due to good loan recovery coupled with a significant drop in financing costs as Danaharta redeemed the last of its bonds in March 2005. Danaharta managed to repay all its borrowings, including the RM11.14 billion bonds, without resorting to additional financial assistance from the Government. Its recovery operations performed remarkably well to generate enough cash to meet its requirements. All bonds were redeemed on time and paid in full without having to call upon the Government guarantee. Table 1: the total of gross non performing loans and percentages of total advances

Based on table 1, year 1998 until 2007 there is decreasing value in gross non performing loan. Danaharta had achieved its primary objective was to remove the NPLs was achieved. It able to carve- out of NPLs six months ahead of schedule and its secondary carve out on schedule. In terms of value, Danaharta was required to have carved out at least RM8 billion worth of loans by the end of December 1998 and a cumulative value of RM33 billion a year
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later. As it turned out, Danaharta carved out RM19.73 billion worth of loans by the end of 1998 and RM39.33 billion by the end of 1999. It was indicate that the Danaharta can able to deal with the NPLs and manage the NPLs. Measurement on Danaharta performances is based on the KPI indexes. Danaharta was possibly one of the earliest Malaysian government agencies to adopt Key Performance Indicators (KPIs) to direct organizational efforts and drive performance. The KPI as the benchmark for this company to achieve its goal. KPIs for this phase of operations were also set on two fronts. First, deadlines were set for the processing of NPLs, i.e. meeting borrowers and deciding on an appropriate recovery strategy (not including the implementation of the recovery strategy). In that regard, Danaharta was required to process RM30 billion NPLs by the end of June 2000 and the remainder of about RM22 billion loans by the end of 2001. As it turned out, Danaharta processed RM31.5 billion by mid-2000 but due to some complications, processed all but RM30 million of the remainder, by the end of 2001. Nevertheless, the final loans were processed by the end of July 2002. The other KPI in this phase was the Loan Recovery Rate, a universal method used to gauge an NPL resolution agencys recovery performance. The rate reflects the ability of the agency to implement its loan recovery strategies effectively. The Loan Recovery Rate is calculated by comparing the actual amount recovered against the amount owed. For example, if RM50 million is recovered against a loan amount outstanding of RM100 million, the Loan Recovery Rate will be 50% ( Danaharta Final Report, 2005). In sum, Danaharta obtains cash generated from direct loan sales, restructured loans as part of the viable loans scheme, as well as securities as a result of settlement schemes and properties. As of December 2002, Danaharta expected to receive RM30.19 billion for defaulted loans the assumption is a zero recovery with RM12.31 billion already recovered in cash (Table 2). Including adjustments, mainly due to interest received on restructured loans and gains or losses on sale of foreclosed collateral and securities, as of December 2002 Danaharta has realised in cash RM 14.6 billion of its recovery. One of the incentives for banks to sell NPLs to Danaharta is that with the higher recovery rates achieved, they can benefit from the above 80%20% profit sharing scheme. As of December 2002, Danaharta redistributed to FIs its surplus recovery of RM9.65 billion in cash and RM56 millions units in securities at par value. At the same time, the remaining balance of cash of RM6.14 billion is available for redemption of outstanding bonds with a face value of RM11.14 billion. This implies that currently RM5 billion of taxpayers money are needed to close the operations of Danaharta. Table 2: Breakdown of recovery received.

According to report by Bank of international settlements (2004) reported that, Asian AMCs were expected to recover between 20% and 50 % of the book value of the loans, comparable to the experiences in other parts of the world. Danaharta recorded a final recovery rate of 58%. the BIS researchers reported that generally, Asian AMCs were expected to recover between 20% and 50% of the bookvalue of the loans, comparable to the experiences in other parts of the world. Danaharta recorded a final recovery rate of 58%. The report had listed 9 factors of the successful of Danahartas AMC. First factor was strong political will which engage the commitment from government and let the AMC work independently and freedom. Second was supportive legal infrastructure that include the effective laws, particularly in bankruptcy and foreclosure and special legal powers to allow AMCs to achieve quicker resolution and higher recoveries. Third was efficient market environment that well functioning. Fourth, the AMC needs to be clear on its mandate, the types of assets to be acquired and the resolution methods it can use. It should focus on asset sales and not be overly burdened by corporate restructuring. Fifth, the tenure of an AMC should generally be limited to prevent it from warehousing acquired assets, in an attempt to prevent realization of large losses. Sixth, Adequate governance which there should be a sound system of internal control and effective external supervision, with regular audits by an independent auditor. Seventh, Good transparency should periodically disclose the results of its operations vis--vis its mandate as well as its audit results, in a manner that will be easily understood by the market. Eighth, Realistic asset pricing: generally assets should be transferred to an AMC at market-based prices, with proper incentives to facilitate transfers. Finally, the last factor was Speedy resolutions for speedy disposition of acquired assets.

6.0 Critical Review In this critical review, analysis about its history, function, structure, performance and achievement produce other perspective about the Danaharta. On our research and opinion about the contribution of this Asset Management Company, its well functioning and gave a good contribution to our economy during the financial crisis on 1997 until 1998. Then, Danaharta can stabilize Malaysias economy, functioning well to solve the NPLs problem when it can recover the NPLs and had been collect half of the NPLs. Moreover, it helps the banking system to work efficiently to give loan to other potential borrowers. Hence, it has good human resources in managing the NPLs problem. Nevertheless, there are other side emerging on its way to helping the NPLs problem which was had to face the public relations and the effect to the third party. Stabilize Malaysias economy One of the Danaharta contributions is stabilize Malaysians economy. Base on final report Danaharta from 1995 until 2005, Danaharta accomplish 58% recovery rate compared to the recovery rates (Datuk Zukri Samad, Berita Harian) of similar agencies in the region, which ranged between 20% and 50% (Final Report 2005). In addition, as provided by the surplus sharing agreements, Danaharta had also distributed to 38 financial institutions RM0.76 billion cash and a total of 66,472,341 units of securities (being surplus recovery for Acquired NPLs). From our view, action from Danaharta is effective because GNP Malaysia in 1997 increase from 39.4 % until 41.2% ( Malaysia Key Economic Indicators. BNM). Besides that, Danaharta increase malaysians economy performance through issues coupon bonds with government guaranteed. Function of zero coupon bonds to purchase NPLs with a maturity period of 5 years and offer the option to extend the maturity term for an additional period of 1, 3 or 5 years (Neoh Vee Heng etc, 2005). Danaharta also can issue Danaharta bonds up to RM 15 billion (nominal value) with progressively in 4 issues per year. In our opinion, the way of Danaharta solve economies crisis through this program is the best way. It can help borrower to have period of time to pay back their NPL. In same time, it also help prevent bankers distress from NPLs. So, bankers have ability to give loan to borrower that can use to investment. Reduce the Non Performing Loans Danaharta also help in lower NPLs resolution cost (Danaharta Final Report 2005). It happen bacause the total cost of resolving the banking systems NPLs was much lower than expected. BNM estimated that the total cost of restructuring the banking sector, which included the resolution of NPLs (Danaharta) and recapitalisation of banks (Danamodal) would not exceed 5% of the nation's Gross Domestic Product (GDP) or approximately RM20 billion. So, the actual cost was only about RM12.5 billion or 3% of GDP but only RM12 billion was attributed to NPL resolution efforts undertaken by Danaharta. It means that Danaharta use the best method to handle NPLs and the same time minimizing cost to handle this situation. Danaharta was function to remove the NPLs from the balance sheets of financial institutions at fair market value and to maximise their recovery value (Dr. Victor Wee, 1999). Danaharta will free the banks from the burden of debts that had prevented them from providing loans to their customers. From our view, Danaharta help banks to decrease their liability and increase liquidity assets of bank. This situation will help financial institution ability to give borrower money to make other investment. In same time, bankers is more careful to borrower
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such as increase value of collateral. If value of collateral increase, financial instituation can felt secure ti give borrower loans. For some reason, early action from Danaharta has allowed the Malaysian financial system to survive compared to the financial system of some Asian neighbours. For some reason, we think that Danaharta did not achieve their goal in 100%. It happen because Minister of Finance establish one firm that called Prokhas. Prokhas establish in 2006 and responsible in manage all of Danahartas assets and continue supply tender from previous owners assets. In 2010, Prokhas made collect RM2.92 billion behalf of Danaharta. In other word, Prokhas is substitute of Danaharta (Berita Harian, 29 April 2010). Human Resource Danaharta is an organization that is implementing a project with limited life. Danaharta also was the smaller AMC in the region with very few layers of hierarchy so as to promote functionality, flexibility and quick in decision making. Danaharta recruitment conditions of high need and quick specific. This is because, the scope of work Danaharta not easy and requires a high capacity to bear it. For example, Danaharta needed to be operational from word go and cope with a multitude of complex situations. In addition, a given training only takes a short time. Therefore, Danaharta requires a workforce with the knowledge and experience wide employment especially in the economic field. This can be proved when most of the workforce Danaharta has previously worked as a firm consultancy, banker. There was no room for fresh graduates (Danaharta Final Report, 2005). Besides that, Danaharta have a limited resource and only one office and Danaharta also emphasised the use of technology to facilitate achievement of tasks and goals. As an example, to facilitate borrowers' efforts to repay loan Danaharta and Malayan Banking Bhd (Maybank) Malaysia's largest bank - worked out a technical arrangement where borrowers could bank in repayments to any of Maybank's branches, nationwide. In addition, a number of initiatives and strategies were successfully implemented to enhance staff performance by improving camaraderie, developing a abilities, initiating self-belief and supporting the team ethic. Furthermore, to cope with the volume of work, Danaharta put into practice a "virtual organisation" philosophy. Virtual organisation referred to the panels of accountants, lawyers, valuers and real estate agents that assisted Danaharta staff in their work. Typically, in a "hub and spoke" model of interaction, Danaharta staff would control teams of professionals that worked on an assignment basis or when required. This significantly reduced the need to employ many permanent staff and hence, eased the process of closing down Danaharta. (Danaharta Final Report, 2005). In conclusion, Danaharta has a strong human resource that help this company to handle the NPLs problem. It has complete team worker to help this country from the economic problem. Hence, it has a organization because their practice the a "virtual organisation" philosophy to cope with the volume of work. Moreover, it own virtual organization referred to the panels of accountants, lawyers, valuers and real estate agents that assisted Danaharta staff in their work. This organization has the quality of good leadership and communication and good team work.

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Effective policy instrument Danaharta seemed to have served as a fairly effective policy instrument in removing and resolving NPLs and in asset recovery. The strong political backing, special legal powers, coordinated bank restructuring strategy and sufficient financial support all contributed to the efficient operations of Danaharta, which is set to wind down by 2005. The policy that government implement and give Danaharta a special power by act can able its work as efficiently. Danaharta has the power and ability to move quickly in transferring assets from a bank. Specifically, there is a two-week transfer time, and it can acquire loans without the borrowers consent, although borrowers then have to deal with Danaharta directly. Acquisition prices are typically negotiated at an arms length basis, using either the net tangible asset or the discounted cash flow method for the NPL evaluation. The transferred assets are then typically replaced on the banks balance sheet with zero coupon bonds that are government guaranteed. Therefore, with a zero percent risk-weight assigned to these bonds, banks capital ratios are improved. The tenor of these bonds is five years, with a roll-over option for another five years. In principle, the bonds are tradable, but in point of fact, since the market is not very liquid, their marketability is drawn into question (Ben Fung, n.d). As a review, the policy was effective to the Danaharta to take over the NPLs from banks without the intervention by government. First factor was strong political will which engage the commitment from government and let the AMC work independently and freedom. The process of the acquisition of NPL without bureaucracy from government. In its early stage in 1998, Danaharta acquired and managed NPLs totaling RM15.1 billion or 20% of the total NPLs in the banking system. Special power makes Danaharta can strategies its way to acquisition and manage it. At the same time, it can able to make decision what is the best solution for the NPLs problem. With this power danaharta have forcing the responsible companies to liquidate their assets and pay off debts. As a result according to Daniel E. Charette (n.d), Danaharta seemed well on its way to success. It expected to be able to get 57 percent of the value of its acquired and managed loans back, and even made a small profit in late 2003. Strengthen the banking sector and bank efficiency Based on our view, benefits the existence of Danaharta was Danaharta had been strengthen the banking sector. In order to keep the strength of banking institutions and enhancing its capabilities in the face of a more challenging business environment, the government has introduced several measures in March 1998 to improve the monitoring and supervisory framework for the existing of the set Danaharta. Danaharta Nasional Berhad (Danaharta) is a national asset management company. The main activities of Danaharta was like to buy, manage and sell NPL sand indirectly provide benefits to financial institutions that enable financial institutions to refocus on their core business. Furthermore, when the effects of the financial crisis felt, the Government has introduced new measures to improve the NPL. Lower NPL resolution cost According to previous research by Victor We he mention that, The Recovery Plan gives top priority to programmers addressing the financial sector problems brought about by the crisis. Danaharta, the Asset Management Company, is established to remove the NPLs from the balance sheets of financial institutions at fair market value and to maximize their recovery value. This will free the banks from the burden of debts that had prevented them from providing loans to their customers. By

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mid-March 1999, Danaharta had removed RM22 billion of NPLs from the banking system. Danaharta is expected to remove RM40 billion of NPLs by June this year. For instant, since 1998, Danaharta has made significant progress in removing NPLs from the banking sector. In the process, it has successfully removed the largest source of instability in the banking system. As at 31 March 2001, Danaharta had acquired loans amounting to around RM48.0 billion from the financial system, representing 2,915 loan accounts. From the banking system alone, Danaharta had acquired andmanaged NPLs amounting to around RM38.2 billion or 42 per cent of total NPLs in the banking system. These NPLs were acquired at an average discount of 55per cent to their gross value. As a result, the net NPL ratio had moderated to7.1 per cent on 6-month classification as at end-March 2001 after peaking at 9.0per cent on 6-month classification as at end-November 1998. In addition, the average monthly rate of increase in nonperforming loans moderated to 2.2 per cent for the first three months of 2001 from an average monthly increase of 10.1 per cent in 1998 (Mohamed Ariff, n.d). Therefore, the establishment of Danaharta a good impact on our economic growth, especially in time of economic crisis in 1998 and help ease the burden of financial institutions take on assignments in the past and therefore enable them to focus on their main job. With the acquisition of NPLs from financial institutional more pronounce increase in NPLs, as has been mentioned before. Thus, with increasing NPLs many productive activities can be implemented and benefit the development of the country. Public Relations The problem that Danaharta had to face is public relations. Accompanying the pressure to do things quickly and effectively was the "public relations" war it had to face from the day its establishment was announced. Indeed, Danaharta was established at lightning speed. The announcement of its creation was made in May 1998 and by June, Danaharta was formally incorporated. Within three months, the Danaharta Act was drafted and passed in Parliament. Critics and observers, both foreign and local, were doubtful of Danaharta's "true" purpose many believed it to be a bailout agency or politically linked business personalities and its ability to carry out its functions. Many also questioned its ability to stay transparent, independent and free of Government intervention. Within Malaysia, the misconception that Danaharta would forgive all NPLs that it would acquire dominated the public arena. The company had been done it work successfully. Although, there many people underestimate its function and ability to strengthen the crisis economic.

Effects to the third party Since Danaharta has the statutory power to buy NPLs from financial institution, it allowed Danaharta to step into the shoes of the selling financial institution. It can able to take the same interest and enjoy the same priority as the selling financial institution, subject to registered interests and disclosed claims. Before Danaharta can buy an asset, it must agree on the terms of the acquisition with the seller. If, for example, Danaharta wants to buy an NPL, it must first agree on the terms and conditions of the acquisition (including price) with the selling bank. Once those terms and conditions have been agreed by both parties, they can then proceed with the acquisition. Danaharta will issue a vesting certificate to evidence the acquisition. The vesting
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certificate will then be used for purposes of registration ( Pengurusan Danaharta National Berhad Bill, 1998). Although statutory vesting allows Danaharta to buy the NPL, Danaharta must deal with the existing registered interests before it can foreclose on the land. In this manner, the Act preserves essential third party rights. Nevertheless, the acquisition on the NPLs not involving the third party or the borrowers. Although the act gave the Danaharta Vesting power to acquisition of the asset it was out of third party agreement. After the acquisition of NPLs, Danaharta has the priority on the third party asset. The action caused of the problem of miscommunication between two party and other party. The misunderstanding problem occur when the selling bank had first change over land as security for the NPL, Danaharta would also have a first charge over the land. The selling bank will remain responsible for any undisclosed claims. If a second charge was registered over the land by another bank, that second charge would continue to exist without any change in priority. The charges was not involving the third party in every changes. As the impact, there are a lot of suit cases between danaharta and other company. Gary K Y (2007), reviews on the Kekatong case and the Danaharta Act. Kekatong was the defendant and plaintiff was Danaharta. The case the plantiffs application for an interlocutory injuction against the defendant to restrain the latter from selling the charged land was dismissed by the High Court. The Hight Court held that it had no jurisdiction to issue te injuction under section 72 of Danaharta Act. Essentially, section 72 bars a court from making an order to stay, restrain or effect the powers and actions of Danaharta.

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7.0 Conclusion In conclusion, the Pengurusan Danaharta National Berhad was the nonprofit company. Its main objective was to take over the NPLs from the financial institutions and manage the NPLs. the company has a good human resource and expertise in managing the NPLs. In addition, it has a good performance and growth. The company had been gave its contribution to nation and stabilize the economy. Furthermore, after the acquisition of strengthen the banking sector and bank efficiency to gave loan to other borrower. Nevertheless, on the beginning the company had to face the challenge of the public relations. There are side effect on the implementation to the other party. In a nutshell, Danaharta was successfully done its task and remove the NPLs so that our economy will growth because of the stimulus of fund from financial institutions.

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Bibliography Bank Negara Malaysia (BNM), Monthly Statistical Bulletin, various issues. Bank of International Settlements (BIS). (2004). Public Asset Management Companies in East Asia : A Comparative Study. Financial Stability Institute. Ben Fung, Jason George, Stefan Hohl and Guonan Ma. (n.d). Case Studies: Public asset management companies in East Asia. Danaharta Final Report. (1998-2005). On line at http://www.scribd.com/doc/2083694/DanahartaFinal-Report-2005. Gary K Y Chan. (2007). The Right of Access to Justice: Judicial Discourse in Singapore and Malaysia. Asian Journal of Comparative Law. Volume 2, Issue 1. MalaysiaKey Economic Indicators, BNM. Access www.bnm.gov.my/files/publication/ar/en/1998/Chapter1.pdf by 1.07am at 26 September 2012. Mohamed Ariff. (n.d). Governance re-invented: progress, Constraints, and remaining agenda In bank and corporate Restructuring in Malaysia.online at http://www.unescap.org/drpad/publication/fin_2148/chap3.pdf by 12 september 2012 on 1st October 2012. Mohd Zaini Abd Karim, Sok-Gee Chan, Sallahudin Hassan. (N.D). Bank Efficiency And NonPerforming Loans: Evidence From Malaysia And Singapore. Access www.epu.gov.my/html/themes/.../China%20Dalian%20Speech.pdf by 11.54 am at 2 Oktober 2012. Neoh Vee Heng etc, (2005). Journal Corporate Bonds in Malaysia Predictive Power of Forward Rates. Bukit Barisan Sdn Bhd, Monash University and Universiti Putra Malaysia. Pengurusan Danaharta Nasional Berhad Act. (2006). The Commissioner of Law revision, Malaysia Under the Authority of the Revision of Laws Act 1968 . Selangor: Percetakan Nasional Malaysia Bhd. Prema Chandra Athukorala. (2010). Working Papers in Trade and Development Malaysian: Malaysian Economy in Three crises. Arndt-Corden Department of Economics Crawford School of Economics and Government ANU College of Asia and the Pacific Prokhas Continues Converting Danaharta Properties Into Cash (Berita Harian, 29 April 2010). Access www.prokhas.com.my/prokhasv2/.../prokhas_continues_converting_ danaharta_propertie s_into_cash.pdf by 1.12 pm at 26 September 2012. Prokhas. (n.d). online at http://www.prokhas.com.my/prokhasv2/index.php?option=com_content&view=article&i d=56&Itemid=88&lang=en on 1st October 2012. Victor Wee, 1999. Journal Malaysians Experience In Dealing With The Financial Crisis. National Economic Action Council Secretariat. Access www.epu.gov.my/html/themes/.../China%20Dalian%20Speech.pdf by 11.54 am at 2 Oktober 2012. Victor Wee. (1999). Securities Association of China and Asian securities Analyst Federation Joint seminar: Malaysias experience in dealing with the financial crisis. Dalian, China. Yixin Hou. (2011). The Non-performing Loans: Some Bank-level Evidences. Birmingham: University of Birmingham.

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