(Petaling Jaya, Tuesday): DAP supports the stand taken by the Prime Minister, Datuk Seri Dr. Mahathir Mohamad that the proposed Asian Fund to bail out troubled member countries should not be linked to the International Monetary Fund (IMF).
The proposed Asian Fund, now officially known as a currency support arrangement, was first mooted by ASEAN and Japan at the Asia-Europe Finance Ministers Meeting in Bangkok last September, and was supposed to have a permanent secretariat and pool of funds, tentatively named Asian Monetary Fund.
Soon, the name changed to Asian Standby Facility, but it underwent another name-change at the Asian Finance and Central Bank Deputies meeting in Manila on Nov. 18 and 19, becoming Asian Fund Facility.
DAP therefore welcomes the decision by the ASEAN Finance Ministers yesterday that the proposed Asian Fund would not be part of the IMF institutional framework mechanism and operational jurisdiction, but would supplement world funds and bring to bear on economies in need of IMF programmes within the region.
However, details are not forthcoming as to how this proposed Asian Fund is to be constituted, its size, who would contribute how much, whether and when it would be set up and the response of the IMF to its establishment.
Mahathir said yesterday the United States has yet to pledge support as it is opposed to any facility which "is not an appendage of the IMF".
As a result of Mahathir's stop-over at the Taipei airport last weekend on his way back from the Asia-Pacific Economic Cooperation Summit in Vancouver and his meeting with his Taiwanese counterpart, Vincent Siew, there is some speculation that the proposed standby fund could be an indirect way for Taiwan to come to South-east Asia's rescue without the recipient countries incurring the wrath of China.
Apart from the proposed Asian Fund, ASEAN and Japan yesterday also asked the IMF to establish a new, quick disbursing short-term facility to help countries facing financial problems and emphasised the necessity of setting up such a facility promptly.
Is the IMF prepared to respond positively to this call by ASEAN and Japan to set up promptly such a new aid facility, which is different from the proposed Asian stand-by facility?
The statement by the IMF managing director Michel Camdessus in Kuala Lumpur yesterday that he did not rule out that Malaysia might seek IMF help although he was not looking for new "clients" should be a "wake-up" call to all Malaysians about the deepening economic financial crisis facing the country, for such a statement by the IMF managing director would be completely unthinkable one month ago.
The further downward slide of the Kuala Lumpur stock market yesterday, resulting in the KLSE losing another 16.99 points at 528.45, and as well as the fall in the value of the ringgit, closing at 3.5425 to the US dollar compared with 3.5000 on Friday should be particularly disturbing for two reasons:
Firstly, the downward slide of the KLSE CI is taking place when some regional bourses had staged a mild recovery yesterday, with the Singapore STIC index rose 33.60 points to 1,694.19, the Hong Kong Hang Seng index rose 223.96 to 10,750.88 points while the Tokyo Nikkei index rose 371.33 points to 17,007.59. Secondly, both the stock market and the ringgit continued their downslide despite the bullish statement by the government Economic Adviser, Tun Daim Zainuddin over the weekend advising investors to buy at bargain prices now, stating that "some reputable foreign investors have made their moves, many have indicated to me personally that they are coming into the market". However, the Daim magic is gone unlike the times when Daim could move and shake markets with his utterances.
This bears testimony to the truth of the observation by the former Deputy Prime Minister, Tan Sri Musa Hitam last week that "Statements by even very influential personalities don't seem to help simply because the business community are hardnosed people and know the real situation".
Last Saturday, the DAP had declared our support for Mahathir's position against Malaysia seeking aid from the IMF, as it would not only be a national and international shame, but would expose Malaysians to very harsh and burdensome IMF policies and conditions whose primary purpose would be to ensure that the IMF loans are paid back in full in disregard of the sufferings caused to the ordinary people. However, as the issue of whether Malaysia would have to seek IMF bail-out has become a popular topic of the Prime Minister and the IMF managing director, there should be the fullest national debate and discussion about this issue, not only with regard to the pros and cons of Malaysia seeking bail-out from IMF, but also whether Malaysia has reached or reaching a position where such an unpleasant eventuality had to be given serious consideration.
(2/12/97)