Barisan Nasional government must prove it has the political will to undertake political, economic and financial reforms to lead the country to tide over the national economic crisis in the shortest possible time by taking the first crucial step of ending the "denial syndrome" or "three-monkey syndrome"

Perak DAP forum on
"Economic Crisis and Recovery - Causes and Remedies"
by Lim Kit Siang

(Tambun Inn - Ipoh, Friday): Malaysians are in for hard, difficult and painful times, especially when in the coming months, the full effects of the national economic and financial crisis would be felt by the people, particuarly those from the low-income groups and those with fixed incomes, like pensioners.

The single greatest challenge today is for Malaysia to end the five-month long non-stop haemorrhage of confidence, embark on a programme of restoring confidence through financial, economic and political reforms by uniting Malaysians to take some of the IMF bitter medicine without having to seek IMF bail-out such as crack down on corruption and cronyism, government and corporate transparency. Barisan Nasional government must prove it has the political will to undertake political, economic and financial reforms to lead the country to tide over the national economic crisis in the shortest possible time by taking the first crucial step of ending the "denial syndrome" or "three-monkey syndrome" of eyes that see not, ears that hear not and mouth that speaks not.

It is most unfortunate that five months into the economic and financial crisis, the government and the majority of Barisan Nasional leaders are still suffering from the "denial" or "three-monkey" syndrome.

This was why in Parliament yesterday, some Barisan Nasional MPs walked out in protest when I referred to the recent report of the United States-based risk consultancy, Business Risk Service (Beri), which was unfavourable to Malaysia.

Beri, which ranks profit opportunities for 50 major countries for next year and the next five years, tracked developments from July to mid-November to come up with its "profit opportunity" recommendations.

According to the November report of Beri, Singapore retained its position as the world's second most profitable place to invest in for the next one to five years, despite the currency turmoil that has hit the region.

Beri gave Malaysia a score of 57, down from 59 in its previous report in July. The rating slipped one notch to 19th.

In its analysis of Malaysia, Beri noted that the Malaysian government had been slow to react to the crisis and that the Prime Minister, Datuk Seri Dr. Mahthir Mohamad's "intemperate remarks" attacking foreign currency speculators and the "ill-judged measures to strengthen the collapsing stock market also undermined confidence abroad".

Barisan Nasional MPs hated to hear these reports, protesting loudly and some even staged a walk-out from the chamber.

So long as the government and the political leadership continues to suffer from the "denial syndrome", wanting to pin all the blame for the economic crisis on external factors and refusing to acknowledge weaknesses and mistakes in government policies, measures and even pronouncements, the "denial syndrome" would be the biggest obstacle to the success of any national economic recovery programme to ride out the current economic crisis.

It is also unfortunate that the Prime Minister is not winding down his rhetoric or "intemperate remarks" according to Beri, as illustrated by his recent speeches and statements in Teheran for the Organisation of Islamic Conference (OIC) Summit.

In Teheran, Mahathir criticised Western democracies for meddling in the affairs of Islamic countries, sheltering their dissidents and forcing them into economic submission.

He said: "They accuse our countries in particular of abusing human rights, of terrorism, of mismanaging our countries, of environmental degradation. With their NGOs [non-governmental organisations], they are able actively to interfere in our affairs, instigating our people to violence against our Government and against each other. They give refuge to those of our people who promote disruptive activities in our countries."

Yesterday, in Teheran, he returned to his favourite theme that the Asian economic crisis was caused by speculators who attacked the currencies of several countries in South-East and North Asia as they have at their disposal funds totalling US$3.6 trillion.

He said there was no way any nation under "attack" could oppose the speculators as none - no matter how rich the nation was - had as much funds as the speculators.

He said the speculators have, between them, US$180 billion. With a borrowing capacity 20 times the amount of funds they have, they have at their disposal funds totally US$3.6 trillion.

He said Malaysia tried to prop up its ringgit with its US$30 billion reserves but to no avail and declared that the speculators were still "now" attacking the ringgit.

I think Malaysians were generally quite upset by these latest statements by Mahathir, as not being helpful in addressing the five-month long economic and financial crisis, particularly in restoring investor confidence.

On Sunday (7.12.1997), Berita Minggu carried an editorial commentary by its editor, A. Nazri Abdullah, in his column Komentar under the title "Jangan menang sorak kampung tergadai", which said among other things:

However, it appears that the messages of the Berita Minggu Komentar that "kita sudah beberapa kali terlepas cakap" and "Kalau kita kuat nafsu bercapak, kita kurangkan nafsu bercakap supaya orang lain tidak sakit hati mendengarnya. Tidak guna kita menang sorak tetapi kampung tergadai. Kita hanya memiliki senapang tanpa peluru, jadi untuk apa kita menembak angin" have missed the mark.

The government must change its ways and end it long catalogue of self-inflicted wounds aggravating the economic and financial crisis in the country, like the UEM-Renong deal announced on 17th November, which caused the KLSE Composite Index to fall by 19.58 per cent, from 667.29 to 536.62 points in three days, wiping out RM70 billion of the investors' funds in the stock exchange or the landbridge announcement by the Prime Minister on 4th December, precipitating the Malaysian ringgit to plunge to an all-time low of US$1= RM3.8650.

If the Government wants the nation to rally behind it as one unit to tide over the national economic crisis, it must be more open, democratic, accountable and transparent. It must be prepared to listen and accept views whether from the Opposition, the NGOs or the ordinary rakyat.

For instance, I had proposed on October 30 that Deputy Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim present a second 1998 Budget in Parliament on November 5 during his winding-up of the budget debate, as the 1998 Budget presented by Anwar on Oct. 17 had failed to address the fundamental issue of restoring confidence in the Malaysian economy or to check twin currency and stock market crisis, as both the Malaysian stock market and the ringgit have embarked on a sharp decline ever since the budget presentation

It was only five weeks later, on December 5, that Anwar heeded the DAP advice and presented an emergency financial package, which was akin to a second 1998 Budget.

DAP is a responsible national political party and although we are in the opposition, we have never opposed for the sake of opposition, as we are prepared to praise where commendation is due.

This was why I had commended Anwar in Parliament for announcing the emergency financial package as a step in the right direction to restore badly-battered confidence in the past five months although I said it was not comprehensive enough to fully restore confidence.

Anwar's emergency financial package or second 1998 Budget was better received than his 1998 Budget on Oct. 17, as while both the currency and stock markets reacted negatively to the 1998 budget, Anwar's emergency financial package at 4 p.m. on Friday, 5th December, checked the unprecedented decline of the ringgit to 3.8650 against the US dollar and strengthened it to 3.6950 an hour later as well as causing a rally of the KLSE, but it could be sustained for only one whole day on the following Monday as by Tuesday, 9th December, the KLSE plunged by 47.32 points.

I agree that there are external factors for the plunge of the KLSE this week, but there also internal factors. One lesson from the five-month Asian economic crisis is that delay can be very costly, resulting in actions which might have been effective if taken earlier becoming weak or ineffective because of procrastinations and prevarications. The emergency financial package announced by Anwar on 5th December would definitely have been more efficacious and effective in restoring market confidence if it had been announced four months earlier, as I had suggested on Oct. 30.

The question is whether we have learnt any lessons from these costly mistakes and misjudgments.


*Lim Kit Siang - Malaysian Parliamentary Opposition Leader, Democratic Action Party Secretary-General & Member of Parliament for Tanjong