(Petaling Jaya, Tuesday): The fall of the ringgit yesterday to the all-time low of US$1=RM3.91, together with the all-time low of the Thai baht and Indonesian rupiahs are clear market responses that the ASEAN 30th Commemorative Summit has failed to restore investor confidence in the region
On the eve of the summit, Malaysian Foreign Minister Datuk Abdullah Badawi said Asean might come up with "its own solutions to solve its economic problems" following the worsening economic situation in the region.
"The situation has worsened. Thailand, Indonesia and also South Korea have all agreed to the IMF packages but their currencies weakened further. Leaders are also concerned that the IMF will take some time to disburse the financial assistance," he said on Sunday when briefing reporters on the outcome of Prime Minister Datuk Seri Dr Mahathir Mohamad's bilateral meetings with Myanmar Prime Minister and chairman of State Peace and Development Council Senior General Than Swee, Thai Prime Minister Chuan Leekpai, China President Jiang Zemin and Vietnam Prime Minister Phan Van Khai.
The expectation that the ASEAN Summit and the ASEAN Plus Three dialogue with China, Japan and South Korea would come out with a plan to deal with the economic crisis and restore confidence to the much-battered economies of the region proved futile, as all that the ASEAN Informal Summit could do was to appeal to major world economies and international financial institutions to step in and check the slide of Asian currencies which continue to depreciate despite various remedial measures.
This has led to the Reuters news agency to comment that South East Asian leaders have to appeal to major world economies and international financial institutions to do more to save their economies as they are "short of their own new ideas for ways out of their currency crisis".
The Reuters report said: "Currency traders were not impressed. The Malaysian ringgit, Thai baht and Indonesian rupiahs hit all-time lows. The Japanese yen, Philippine peso and Singapore dollar also fell. Share prices on the Jakarta Stock Exchange closed 7.2 percent lower, a four-year low."
The Prime Minister, Datuk Seri Dr. Mahathir Mohamad said yesterday that the ASEAN summit had reached a decision that the United States, the European Union and Japan, besides international financial institutions, should come in to address the global problem.
Mahathir’s statement is most welcome as some of the pronouncements by Malaysian leaders in the past few months give the impression that Malaysia wants to strike out on its own national path at a time when the world is even more inter-dependent and closely knit as a result of globalisation.
In fact, the local mass media on the eve of the ASEAN Summit gives the impression that there was a campaign to vilify the International Monetary Fund. The Thai government has denied a report yesterday which quoted the Foreign Minister, Datuk Seri Abdullah Badawi as saying that the Thai Prime Minister, Chuan Leekpai had told Mahathir that IMF’s assistance to Thailand had not borne any significant result, prompting the ASEAN leaders to focus more attention to the region’s economic woes.
Asian economies undergoing the economic crisis should stop sending out mixed and confusing signals which could do nothing to restore confidence, as for instance, one the one hand, denouncing the IMF as a tool of American and Japanese ecoonomic colonialism, while in the next breath, asking the United States, Japan, European Union and IMF to help overcome the economic crisis as soon as possible.
The DAP has declared our open support to the government against seeking IMF bail-out, which would not only be Malaysia losing her economic sovereignty and going into national receivership but would involve accepting very harsh conditions which would focus on loans repayment at the expense of social justice. However, DAP wants the government to accept the IMF bitter medicine, as carrying out far-reaching political, economic and financial reforms necessary for economic recovery without having to go to IMF to seek a bail-out.
Although there are many grounds for criticising IMF bail-out efforts, even questioning whether its approach and solution for 20th century currency crisis are relevant and applicable to 21st century financial crisis, there is no need to demonize the IMF.
This would make it even more humiliating if Malaysia has to go to IMF for help, for much as we hate having to take the IMF option, even Mahathir did not want to rule out the possibility that Malaysia might have to follow Thailand, Indonesia and South Korea and turn to the International Monetary Fund for emergency aid when he was specifically asked this question by reporters on Sunday.
It is wrong and unfruitful to demonize, just as it was wrong when earlier Mahathir demonized George Soros and some foreign press demonized Mahathir.
The Berita Minggu commentary on 7th December, 1997 under the heading "Jangan menang sorak kampung tergadai" should be compulsory reading by all Malaysian leaders and people which concluded with the following:
Ingin kita ulangi sekali lagi bahawa kita tidak mampu berperang dengan sesiapa kecuali dengan diri kita sendiri. Kita mesti berperang dengan nafsu kita. Kalau kita kuat nafsu bercakap, 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.
Government leaders should also take heed of last Sunday's Komentar in Berita Minggu under the heading "Mengkritik diri lebih mulia daripada dikritik" which asked:
"Apakah semua projek yang diswastakan itu benar-benar memenuhi aspirasi kebangsaan atau sekadar ciptaan sektor swasta bagi menunjukkan keuntungan syarikat supaya harga saham mereka tidak jatuh? Apakah semua projek besar yang diluluskan itu benar-benar perlu disegerakan? Kita sepatutnya mengindahkan sungai bukannya membina bangunan di atas sungai. Kita belum memerlukan lebuh raya di kawasan pergunungan kerana banyak lagi jalan kampung yang belum berturap tar."
The ASEAN Summit has failed to be a confidence-building measure and appears destined to be a failure like the three previous international conferences, the Manila meeting of APEC Deputy Finance Ministers in early November, the APEC Summit in Vancouver on Nov. 24-25, the ASEAN Finance Ministers meeting in Kuala Lumpur and dialogues with their counterparts from United States, Japan, Australia, China and South Korea - all of which had not been able to check the downslide of the regional currencies and stock markets.
At the very least, the ASEAN Summit and the ASEAN Plus Three Dialogues should not end empty-handed. The ASEAN Summit Plus Three Dialogues should take the initiative to convene a global meeting bigger than APEC, which should be European Union + APEC + IMF + World Bank Summit, to deal urgently with the Asian economic crisis which could become a threat to global economy.
Such a global EU + APEC + IMF + World Bank Summit should be held next month in view of the urgency of the cascading economic crisis in Asia, and may be, Malaysia can offer to host such a Summit to find a solution to the Asian economic crisis.
(16/12/97)