(Dewan Rakyat, Tuesday & Wednesday): I am very disappointed that the Deputy Finance Minister, Datuk Wong See Wah had not honoured the solemn promise given by Deputy Finance Minister, Datuk Dr. Affifudin Othman who promised in Parliament last Thursday that the government would give satisfactory answers to my ten questions about the RM2.34 billion UEM-Renong deal, which had been the single biggest corporate catastrophe in recent times, precipitating the biggest crash in the Kuala Lumpur stock market in the five-month economic crisis, causing 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.
On my specific insistence, Dr. Affifuddin had agreed and promised that during the presentation of the second reading of the Securities Industry Amendment Bill, the government would give satisfactory answers to the ten questions I had posed on the UEM-Renong deal, but Datuk Wong has not made any mention of the UEM-Renong deal when tabling the Bill just now.
Although Datuk Wong has now stood up to say that he is ready to answer all questions raised about the UEM-Renong deal during this debate, this is still a breach of a solemn undertaking given by the government in Parliament last week, and I hope he would honour his undertaking that there would be full and satisfactory answer to the following ten questions on the UEM-Renong deal during the winding-up of the debate on this bill:
The ten questions on the UEM-Renong deal are:
1. whether it is true that the RM2.34 billion UEM-Renong deal is actually a bail-out for Tan Sri Halim Saad in his US$800 million purchase of Philippines' National Steel Corporation (NSC) from Wing Tiek Holdings Bhd, through his proxy, Abdul Rashid Manaf, through the shell company Hong Kong-based Hottick Investment Ltd as well as take over the liabilities.
2. whether it is true that four banks, namely Maybank, Rashid Hussein Bank, Bank Bumiputra and Bank of Commerce shared equally in the syndicated US$800 million loan, given to Abdul Rashid Manaf in December last year, guaranted by Halim with Renong shares;
3. whether the four banks had breached the rule on single customer limit which, I understand is RM450 million for Maybank, RM250 million for Bank Bumiputra and Rashid Hussain Bank and RM150 million for Bank of Commerce - all exceeded by the four banks when they each give Abdul Rashid Manaf a loan of US$200 million (or RM500 million at the time).
4. Whether it is true that the UEM-Renong deal was necessitated by the drastic fall in the price of Renong shares which were used as collateral for the personal guarantee by Halim Saad for the US$800 million loan, as in January, the price per share of Renong was RM4.58, but it fell to RM2.90 per share on 17th November, the date of the announcement of the UEM-Renong deal, which is a fall of 36.68 per cent. If the entire collateral is in Renong shares, it would mean a top up of 37 per cent of US$800 million, which comes to about US$300 million, and at current exchange rate, this would work out to over RM1 billion.
5. whether these four banks were also the banks which have given UEM the RM2.34 bill loan for the acquisition of 723 million Renong shares.
6. Whether it is true that Abdul Rashid Manaf, who is a lawyer practising in Kuala Lumpur, to whom the US$800 million loan was given, did not have the creditworthiness for such a colossal loan.
7. Whether Halim Saad was the beneficial owner of the 32.6 per cent stake in Renong which was bought by UEM from eight nominees. According to Form29A dated Nov. 26 to Renong, a copy of which was furnished to KLSE and which was reported in the Sun of November 29, 1997, UEM said it bought eight tranches of Renong shares registered under various holders totalling 722.883 million shares on Nov. 17. The first tranche, for 340.2 million shares, was registered under BOC Nominees (Tempatan) Sdn. Bhd., the second for 285.715 million shares was registered under HLB Nominees (Tempatan) Sdn. Bhd while the third under Rashid & Lee Nominees (Tempatan) Sdn. Bhd. was for 67.407 million shares. Other blocks were 18.06 million shares (Lintasan Savana Sdn. Bhd), 9 million shares (RHB Nominees), 1.5 million shares (Multi-Purpose Bank Nominees), 1 million shares (BHLB Nominees) and 5 million shares registered under Pengkalan Nominees (Tempatan) Sdn. Bhd.
8. Furthermore, if Halim Saad was the beneficial owner of the eight tranches of Renong shares totalling 722.883 million shares, whether he had committed offences under the Companies Act for not filing a declaration as well as under the Code on Take-Over and Merger in failing to make a mandatory general offer to minority shareholders, as together with 23.3% personal stake in Renong (which he admitted in a press conference on November 19), he would have owned 55.9 per cent of Renong shares - well beyond the 33% trigger point.
9. The government has been calling on banks to be prudent to tide over the banking crisis by giving priority in allocating credit to borrowers engaged in productive activities in high-technology, foreign exchange earnings industries such as tourism and export-oriented sectors of the economy. How can US$800 million loan to acquire a foreign firm or RM2.4 billion to enable UEM to acquire 32.6 per cent stake in Renong from the eight nominees come under such a category of prudential loans?
10. If the four banks could breach the single customer limit by giving mega-loans which violate the government's guidelines on bank loans, what is the magnitude of the such unproductive mega-loans in the banking and financial sector in the country.
Parliament and the country are entitled to full answers to these ten questions about the UEM-Renong deal, and unless the government could be forthcoming with satisfactory answers, there should be a full public inquiry into the UEM-Renong deal, as well as to ascertain whether there had been violation of Banking and Financial Institutions Act, Companies Act and Securities Industry Act as well as other malpractices.
The UEM-Renong deal is a test case as to whether the government has the will to clean up malpractices in the corporate sector, including the banking and financial sector, or whether transparency and accountability would remain to be a major problem in the corporate and banking sector.
The Prime Minister, Datuk Seri Dr. Mahathir Mohamad had been in the international forefront condemning "rogue speculators" and manipulators who have through their "immoral" actions destroyed the currencies and economies of developing and small natiions.
However, there seems to be very little government action or concern over the years against unscrupulous corporate figures who, either through inside information or connections with the powers-that-be, manipulated the Kuala Lumpur stock market to profiteer at the expense of the small investors.
There should not be any double standards where we rail against "manipulators" in the currency market while closing our eyes to the "manipulators" in the stock market.
In this regard, the time has come to end the confusion which reigns in the market since the statement by the Securities Commission executive chairman Datuk Dr. Munir Majid on 5th December that the Securities Commission would wait for the United Engineers Bhd's (UEM) extraordinary general meeting of shareholders to ratify the company's plan to buy 32.6 per cent of its parent Renong Bhd., before deciding on whether it should make a general offer for remaining Renong shares.
Munir, who was interviewed by reporters, said: "If the shareholders approve it, then the commission will study the waiver given (by the Foreign Investment Committee) on whether UEM complied with the regulation".
The next day, 6th December, a spokeswoman of the Securities Commission reiterated that the Securities Commission had yet to decide whether UEM still retained its waiver from making a general offer on the 23% balance of Renong shares still floating publicly.
This is a contradiction of the announcement by the Finance Minister, Datuk Seri Anwar Ibrahim, who had announced the withdrawal of the waiver in his Ministerial statement in Parliament on 25th November on the UEM-Renong deal as UEM together with Renong chief Tan Sri Halim Saad and associated company Time Engineering Bhd would hold a combined 76.9 per cent stake in Renong.
I had asked this question to the Deputy Finance Minister, Datuk Dr. Affifuddin Othman during the winding-up of the debate on the Finance Bill (No. 2) 1997 last week, but Affifudin was unable to give a clear-cut statement, referring weakly to Anwar's statement but not prepared to take a strong stand to contradict Munir.
It does not inspire confidence when the various government authorities cannot give a clear-cut answer on a simple issue as to whether the waiver granted to UEM to make a mandatory general offer to minority shareholders had been withdrawn as announced by Anwar in Parliament, or whether the waiver still stands. Who can blame the foreign press therefore in reporting that "A regulatory haze" surrounded the murky UEM-Renong deal.
Why are the various government authorities so ambiguous about whether the waiver given to UEM from making a mandatory general offer to Renong minority shareholders had been revoked or whether it still stands?
The picture has become even more cloudy with the pronouncement by the Economic Adviser to Government, Tun Daim Zainuddin, who clearly disagreed with Anwar Ibrahim on this issue. On 9th December, he said that the UEM-Renong deal was a private sector matter which was not linked to the government and that he had no interest in it.
However, this did not prevent Daim from commenting that UEM's stake was below the 33 per cent trigger for mandatory general offer, and that approval was given to UEM on its own and not in concert with other interested parties.
Calling it a "matter of interpretation", Daim admitted that if related interests like those of Renong chief, Tan Sri Halim Saad's are taken into account, then the stake would exceed the trigger point of 33 per cent.
Parliament and the country are entitled to know which "interpretation" has prevailed in government, that of Anwar or Daim, whether Daim had overruled Anwar on this issue, and this is why the Deputy Finance Minister should clarify during the winding-up of the debate whether Anwar's announcement in Parliament on the withdrawal of the waiver to UEM from having to make a mandatory general offer to Renong minority shareholders still stands or has been overruled and overruled.
Can the Securities Industry (Amendment) Bill as well as the Second 1998 Budget in the form of the emergency financial package announced by the Deputy Prime Minister and the Finance Minister, Datuk Seri Anwar Ibrahim on Dec. 5 and presented to Parliament on Dec. 8 address the negative market sentiments and restore investor confidence in the battered stock market.
Malaysia is facing a serious economic crisis. Our Ringgit has depreciated greatly from 2.50 a few months ago to as low as 3.87 to the US dollar today, although yesterday it fell to the all-time low of US$1=RM3.92. Our stock market (Composite index) has also plunged from 1300 to close to 500 in just a matter of few months.
Our stock market has had a great time in the past many years. Many counters got listed to the tune of a few within a week with their first opening prices commonly several times of their offer prices. So many new securities were oversubscribed hundreds-fold. Now we see the reverse. Opening prices lower than the initial offer price are becoming common with many issues not fully subscribed. It is becoming common prices of new-listed counters to fall to less than one-third of its fofer price within a short few months, e.g. Utama Bank.
Yesterday was the first listing of THB Industries Bhd. Its offer price was RM2.50, but when it started trading yesterday, it was only worth RM1.50.
There is another new counter listing today - CNLT (Far East) Bhd, a yarn-making company whose offer price was RM3, but opened at RM2 drifted down to RM1.59 this morning.
There is now a new phenomenon in the stock market. In the past, any person who is lucky to strike a new share would make a profit of at least two or three times on the first day of listing. Now a new corporate reality has set in where one loses money immediately on the day of listing, should one be lucky or unlucky to strike a new share.
This shows how bad is the market sentiment in Malaysia. In the past, the corporate culture of Malaysian corporate figures is to be seen to be associated with the powers-that-be which would be a passport to mega-loans for unproductive activities without having to go through any process of transparency or accountability.
Now, such magic is no more, as the son of the Prime Minister, Mokhzani Mahathir is himself unable to wield any magic, when shareholders of his company, THB Industries Bhd, lost money on the very first day of listing!
One reason why market sentiments are so negative and bad is because the Securities Commission had failed as an effective watchdog of the securities market, where many undesirable practices undermining minority shareholders interests were blatantly ignored.
In the past 12 months, there have been a spate of corporate exercises which highlight the "cashing out" tendency by controlling shareholders against the interest of minority shareholders.
For example, a day after the UEM-Renong deal, property-based Tanco Holdings Bhd proposed to buy Tanco Resorts Bhd, a firm which operates vacation ownership schemes, from Tan Jong Nam and Aznan Abdul Aziz for 90.54 million ringgit cash. Tan and Aznan are both substantial shareholders and directors of Tanco Holdings.
In mid-October, IOI Properties Bhd announced that it would buy 35.5 ha of land near the new federal capital Putrajaya from its major shareholder Lee Shin Cheng for RM145.6 million cash.
In August, another property firm, Bolton Bhd, said it would buy 64 per cent of Kenneison Brothers Sdn Bhd, which has interests in quarry, ready-mix and construction firms for RM182million cash and a 32 per cent stake in Kejora Harta Bhd for RM202.6 million. These assets are substantially owned by the Lim family, who control Bolton.
In April this year, Lee Kim Yew and Azhar Hashim, both directors and shareholders of Country Heights Holdings Bhd, sold their privately-owned convention, exhibition and showroom centre known as Mines to Country Heights for RM235 million cash.
Can the Securities Commission explain whether these listed firms had been used by their major shareholders against the interest of minority shareholders and what it has done to root out the rampant practice where majority shareholders of KLSE-listed companies are allowed to milk their minority shareholders’ interests.
The most glaring example is the manner Tan Sri Ting Pek Khiing is being bailed out by his controlled listed companies. On 25 July 1997, Ekran made a surprise announcement of proposed buying essentially Ting's shares in companies including KLSE-listed ones like Granite (32.29%) and PWE (49%) for a total price RM924,450,000 in cash. Ting has pocketed the refundable deposits of RM92,445,000 cash. This is 10% of the purchase prices.
On 6 May 1997 (barely 2 months earlier), Granite Industries Bhd announced proposed purchase essentially Langkasuka Resorts, a water theme park and Mahsuri International Exhibition Centre (all of Langkawi) for a total of RM128,197,322 in CASH. A 30% deposits in CASH of about RM38.5 million was paid to Tan Sri Ting Pek Khiing. As a result, Ting got about RM131 million as deposits in CASH in these deals totalling about RM1,052 million.
Ting has admitted he is hard hit in this turmoil. He had to swallow about RM1.2 billion in the ill-fated Ekran rights issue lately. Ting financial status is in question. What securities Ekran and Granite (his listed vehicles) got when Ting fail to refund these refundable deposits?
Can these deals be completed? The Granite and PWE shares are way way down from the agreed prices. The asset quality of these two counters have deteriorated substantially. The billions contracts on Bakun project is gone. The financial health of these two companies are highly questionable. These would be liability instead of assets to Ekran. The obvious is that Tan Sri Ting Pek Khiing is squeezing his controlled-listed-companies to bail him out.
One can see clearly the haste in which Tan Sri Ting's listed companies approved his owned asset injections. Ting is pocketing about RM131 million cash interest free. He is in sure win position. If the deal is a success, he has got somebody to pay huge premium for the lousy assets. If the deal is off, he has gain free usage of the hugh cash deposits.
Let me give another shocking example to show our deplorable standard of public disclosure.
Ekran announced its disposal of Wembley stakes for RM284.5 million in cash to Dato Tiong yielding a profit of RM26 million to Ekran. This means the sale is for RM6.00 a share comparing to its recent price of RM1.12 before suspension. The deposit paid is RM1 million only. This equivalents to 0.35% of the sale price. This is a far cry that Ting received deposits 10% to 30% from his controlled Granite and Ekran.
Wembley’s financial health is highly questionable. Its Plaza Rakyat mega project in Kuala Lumpur is a big flop. It represents about two-third of its asset. The project is supposed to be completed by February 1998, only 2 months away, but this is clearly not possible. Wembley is also involved in law suits recovering the profit guarantee for the Plaza Rakyat project from its two directors. The sad fact is that Ekran is highly unlikely to complete this fairy-tale sale. Ekran stands to lost RM240 in interest cost and diminished share price. Moreover, whether it can sell off with this big loss is also highly questionable.
Tan Sri Ting had injected assets ("Diamond League Sdn Bhd") to reverse take over of Granite in late 1995. The original price was RM654 million. Securities Commission has slashed its offer price for some of the component assets by as much as 59%. Did Ting reject it. No. He took it gladly and laughed all the way to the bank. The Securities Commission also stipulated a profit guarantee of RM45 million per year for the three financial year of 1995, 1996 and 1997 (ending 30 June). Did he meet this guaranteed profit? Granite 1995 and 1996 did not state the profit figures of Diamond League Sdn Bhd. However, Granite show a profit of about RM14.7 million and RM31.3 million for financial year 1995 and 1996. This is a good indication that the profit figures had not been met. Did Ting pay for the shortfall? Did Securities Commission carry out any enforcement? I hope there could be an answer from the Securities Commission.
A large part of the injected assets ("Diamond League sb) are four hotels. Their performance are shocking. Granite annual reports show this hospitality business make a profit or only RM5.23 million in 1995; and a lost in 1996. The profit over asset employed was 0.8% for 1995. With this poor performance, yet Tan Sri Ting see fit to injected more hospitality asset to Granite for RM128 million cash. This is a suicide for the company. But he got bail out.
History is repeating again. On 28 November 1997 (only 2 weeks ago), Tan Sri Ting Pek Khiing reached an agreement to sell about 24.44 million shares (or 22%) of Pacific Chemical equity to the same Dato Tiong King Sing for an undisclosed price. It also reported that Pacific Chemical (listed in Kuala Lumpur stock exchange) will also buy 2 more companies from Dato Tiong King Sing for RM654.5 million. It involves 99.9% of a company called Great Profile Sdn Bhd for RM25 million in cash and RM502 million in new cumulative redeemable preference shares; and 45% of a company called WIJAYA BARU Sdn Bhd for RM157.50 in cash. Great Profile recently agreed to buy 753 acres land near Port Klang for future industrial, commercial and residential development. Wijaya Baru Sdn Bhd is in construction and land reclamation. This highlight the following:
This 22% share sale deal means that the buyer has the control of the company, but without giving the minority the opportunity to a general offer of their shares.
The root cause of such disturbing deals can be tracked back to earlier in the year, when the Malaysian stockmarket was showing signs of weakness, leading to Ekran’s rights issue to finance the huge Bakun dam project being under-subscribed.
What makes these deals even more painful for minorities is the fact that they are mainly cash transactions, thus allowing the major shareholders to escape the scrutiny of the Securities Commission.
According to the SC’s guidelines on acquisitions by cash (Section 17.05), SC approval is not needed unless required by the Foreign Investment Committee.
The SC guidelines for related-party transactions (Section 20), relating to the purchase of securities or assets by publicly-listed forms from shareholders and directors, requires only information which describes particulars, purpose, consideration, effects and nature of the interest of the related party in the transaction.
Of course, the rules stipulate that approval of a firm’s shareholders must be obtained for these transactions at an extraordinary general meeting.
But such proposals are rarely overturned at EGMs as minority shareholders are often out-vopted even after major shareholders are forced to abstain from voting.
An example is the highly criticised deal in which Faber Bhd sold its stake on cash-cow Project Lebuhraya Utara-Selatan to United Engineers (M) Bhd two years back.
Vociferous protests from minority shareholders during its long-drown EGM did little to block the deal.
While related-party deals are not a recent phenomenon, their frequency in the deteriorating market of late has raised the market belief that controlling shareholders are cashing out and saddling listed firms with assets of debatable value and prospects.
The Securities Commission has failed to protect investor interests when key corporate figures make public statements which are misleading or inaccurate, as illustrated by the following examples:
How can the Securities Commission claim to be a responsible, vigilant and effective watchdog of the securities industry market when it could allow such misleading and inaccurate statements to be made which are highly detrimental to investor interests?
It is most regrettable that Parliament has not seen fit or urgent to have an emergency debate on the five-month long national economic crisis, especially the need for the government to reconsider its proposal to establish a National Economic Action Council (NEAC) and to debate the most effective way to address the five-month-long national economic crisis with the Malaysian ringgit falling to the all-time low of US$1=RM3.92 despite the holding of an ASEAN 30th Commemorative Summit as well as the ASEAN Plus Three Dialogue with leaders of China, Japan and South Korea.
The world has seen the ASEAN Summit and the ASEAN Plus Three Dialogues as failures to address the five-month long economic crisis in Asia.
The International Herald Tribune report the ASEAN Summit carries the headline: "ASEAN Chiefs See No Solution - 'We Are Victims,' Mahathir Says as Free Fall Continues", while the Asian Wall Street Journal's headlines "Asean Summit Ends on a Weak Note". Washington Post's headline is "South East Asia Talks End In Mood of Helplessness". London Times' headline is "Rescue Summit Gives Little Hope to Asian Tigers".
The fall of the Malaysian ringgit to all-time lows on Monday and Tuesday during the ASEAN Summit and the ASEAN Plus Three, together with other regional currencies, The fall of the ringgit yesterday to the all-time low of US$1=RM3.92, together with the all-time low of the Thai baht, Indonesian rupiahs and Philippine peso are clear market responses that the ASEAN 30th Commemorative Summit has failed to restore investor confidence in the region despite the eve-of-summit statement by Malaysian Foreign Minister Datuk Abdullah Badawi that the Asean Summit might come up with "its own solutions to solve its economic problems" following the worsening economic situation in the region.
The ASEAN Summit has failed to be a confidence-building measure and has gone the way of 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 been failures unable 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 have ended empty-handed. Yesterday, I had proposed that 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.
It is unfortunate that this idea was not taken up by the ASEAN Summit PLUS Three. Only the Filipino President, Fidel Ramos has come out with the proposal for a global conference to bring together governments, monetary institutions and experts to check the slide of Asian currencies. He said if a conference of 100 governments, 3,000 experts and scientists and NGOs in Kyoto could secure commitments from developing and advanced countries to check pollutant emissions over global warming, why can't one be held for an issue that is of macro concern?
Malaysia still suffers from a very serious "denial syndrome" despite five months of the prolonged economic crisis, which have caused over RM620 billion losses in the past five months as a result of the currency and stock market plunges, and the most serious headquarters of "denial syndrome" is undoubtedly Parliament itself, with Barisan Nasional MPs denying that the country is faced with a very serious economic crisis which can only get worse before it gets better as well as denying that they are suffering from a "denial syndrome"!
On Sunday at 6 a.m., when I hooked up to the Internet at 6 a.m., and saw the CNN report on Mahathir’s speech to ASEAN business leaders before the ASEAN Summit, I have never felt such great relief as I thought I saw the first concrete sign that the Prime Minister can be flexible enough to set an example to get the government to end its "denial syndrome" and face up squarely to the economic crisis which will get worse before it could get better
Mahathir was reported as saying that Asian governments and businesses were party to blame for the region’s financial crisis and that ruthless surgery was needed.
He said: "There had been many abuses and malpractices, including of course large foreign borrowings and deficits in the balance of payment. These abuses on their own would have resulted in slowing down growth or even reversing it."
However, he said, the devaluation of currencies had precipitated matters, magnified the scale of their economic reversals and caused financial problems.
Mahathir’s speech on Sunday would have been his best-received one in the five-month economic crisis, for it reflected his ability and willingness to set the example to emerge from the "denial syndrome" which had clouded the government’s judgment and credibility in handling the economic and financial crisis.
However, the prevalence and gravity of the "denial syndrome" could not be undone by one speech by Mahathir, as can be seen by the different way the local and foreign mass media handled the speech.
The CNN, based on Reuters report, carried the Mahathir’s speech under the headline "Malaysia PM urges ruthless economic surgery".
The CNN report said Mahathir "withheld his trademark attacks on foreign speculators" , and instead said "Asian nations will have to allow unviable businesses to die, and companies will have to retire unnecessary workers as a surgeon would amputate an infected limb. "
Mahathir was quoted as saying: "What is not viable must be killed outright so the survivors can be free to consolidate their positions. As a doctor who once practiced surgery, I appreciate the need to amputate gangrenous legs to save the rest of the body. What we have to do is surgical. And we will do it. We must reassure the world that we will carry out what we have undertaken to do, at whatever cost. We hope that in the end we will restore confidence and the wealth will flow back."
CNN also reported that 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 because if he did, his remarks could spark a crisis of confidence and force down the value of the ringgit.
Mahathir was quoted as saying: "I'm scared of saying anything that might result in our currency going down."
However, Malaysians could not read such a report in the local mass media, whether through radio, television or the newspapers, as if the foreign and local press are reporting two completely different speeches and functions.
It is clear that the government must not only stop its "denial syndrome", the Malaysian mass media should also stop reporting only "good" news while suppressing "bad" news.
Malaysians hope that Mahathir’s new readiness to end the "denial syndrome" as reported by the foreign press would now become a new government policy so that the country and people can more realistically deal with the painful remedies and measures which have to be adopted to face up to the worsening economic crisis. . However, the failure of Parliament to hold an emergency debate on the worsening economic crisis seems to indicate that the government has not emerged from the "denial syndrome".
It is about four weeks since the announcement by the Prime Minister, Datuk Seri Dr. Mahathir Mohamad after an emergency UMNO Supreme Council meeting on 20th November that the government would set up a National Economic Action Council (NEAC) to deal with the economic crisis and put the Malaysian economy back on track in the wake of the fall in the value of the ringgit and the stock exchange.
Mahathir had then announced that the council, which would be chaired by the Prime Minister, would have emergency powers although a state of emergency had not been declared.
Malaysians are very surprised that the NEAC has not been set up after the passage of nearly four weeks, when the value of the ringgit during this period had fallen from RM3.52 to RM3.92 yesterday against the US dollar, with the Kuala Lumpur stock market plunging repeatedly, raising the question of the overnment's seriousness about the gravity of the national economic crisis.
I have said that if the NEAC is to have executive powers, it would be superseding or at least co-equal with the Cabinet - which would constitutionally be most improper unless a state of emergency has been declared, suspending the normal functions of the Cabinet. If its role is merely advisory, the NEAC should stand for National Economic Advisory Council and not National Economic Action Council.
Cabinet Ministers have clearly fallen down on their responsibility as national stewards, to the extent that another body has to be appointed to share and even supersede Cabinet responsibilities.
On Sunday, Mahathir talked about strong surgery, amputation of gangrenous legs to save the body. The first target of strong surgery of amputation should be the Cabinet through a major reshuffle to chop off the gangrenous parts, for the infusion of new blood into the Cabinet to replace old and tired Ministers who seem to be quite lost in a fast-changing world brought about by information technology and globalisation and even frightened Ministers, who are not so much worried about the economic crisis but the impending financial disaster of their relatives and close-ones as a result of unproductive mega-loans, like that of the 27-year-old wonder boy who could embark on a RM1.2 billion corporate acquisition in three months.
The Prime Minister should reconsider the whole concept of NEAC as not to undermine the principles of Cabinet responsibility and parliamentary democracy. Instead of proceeding with the formation of a hybrid body like the National Economic Action Council, the Prime Minister should carry out a major cabinet reshuffle to remove the deadwoods in the Cabinet, and to form National Economic Crisis Cabinet with technocrats and experts as members of the Cabinet with the expertise and knowledge to deal with the national economic crisis, and most important of all, who can command public confidence in their integrity, competence and dedication.
To form such a National Economic Crisis Cabinet, the Prime Minister should tap experts in the private and public sectors who are not MPs, by appointing them as Senators. This will also raise the standards of the Senate, which at present is nothing more than a refuge for political has-beens and political rejects who could not get elected into Parliament through the front door.
Furthermore, the government should form a National Economic Crisis Consultative Council (NECCC) comprising representatives from all political parties, both government and opposition, academicians, industry, commerce, trade unions, professional bodies, NGOs, so that it could be a nationally unifying force to unite and mobilise all Malaysians behind a national economic recovery programme to tide the country through the economic crisis in the shortest time possible.
The first primary task of the NECCC should be to purge the country of the prevalent and widespread ‘denial syndrome’ propaganda, with many Malaysians from the highest levels downwards who still think that the economic and financial crisis would have minimal impact on everyday life on the ground that the country’s fundamentals are strong, national savings rate is high, exports are rising and the current accounts deficits are coming down.
These are Malaysians who fully trust in the government and have become the victims of the ‘denial syndrome’, either believing that the country is not suffering from any economic crisis or that the economic crisis is caused solely by malevolent external forces and factors.
The five-month long national economic crisis has shown that the government does not know what is best for the people, and it must be more humble, democratic, accountable and transparent involving the talents and energies of the Malaysian people in the national campaign for an economic recovery.
To ensure that the NECCC would be a nationally unifying force mobilising all Malaysians, regardless of political differences to act as one unit to tide through the national economic crisis in the shortest time possible and with the least social injustices and upheavals, the NECC should:
I believe that if my proposals for a National Economic Crisis Cabinet and a NECCC are accepted, these would be great confidence-enhancing measures.
I am sure that both these proposals would receive positive market responses because of the boosting effect they would have on confidence, which would be better than the 1998 budget on Oct. 17 when both the currency and stock market kept declining, or even the Second Budget in the form of the emergency financial package on Dec. 5, which was later presented to Parliament on Dec. 8, but which was very short-lived in securing positive responses from the currency and stock market.
I know there would be Barisan Nasional MPs who would accuse the DAP of not being serious, of even being guilty of political gimmicry, in suggesting an Opposition-headed NECCC.
Nothing is further from the truth. At a time of national economic crisis, all Malaysians, regardless of political affiliation or differences, must come together to unite and mobilise the people to work together to make a success of the national economic recovery programme to ensure that the economic revival and turnaround could come about in the shortest possible time.
If the DAP is only interested in playing politics, we would stand by the sidelines and just point an accusing finger at the Barisan Nasional government for its various mistakes whether in policies or practices which have brought about the economic crisis.
However, the DAP is not interested in looking for scapegoats as our primary concern is how Malaysians could tide through national economic crisis in as short a time as possible and with minimum pain, hardships and suffering. This is why we are prepared to fully participate in the NECCC and even suggesting that the NECCC should be Opposition headed, for this would be a signal to the whole nation that at the time of national economic emergency and crisis, all Malaysians, regardless of political affiliation, whether government or opposition, are united in wanting to ensure that there could be the fastest economic revival and turnaround.