Government must find answers why the ringgit had nosedived from RM2.6475 to RM3.4885 to a US dollar while the KLSE CI had crashed from 1,041.26 points to 560.09 in the past four months after Mahathir had named George Soros as the "rogue speculator"

- DAP Sri Kembangan Branch dinner
by Lim Kit Siang

(Sri Kembangan, Sunday): It was reported today that the Entrepreneur Development Minister, Datuk Mustapha Mohamed yesterday dismissed claims that the economic problems facing the country was caused by wrong Government policies.

He said the same policies had made the country's economy robust with strong fundamentals.

Mustapha should look at the example of South Korea which has been transformed from an Asian Tiger into an Asian beggar because of pursuing unchanged the same policies.

The same policies which had enabled South Korea to achieve a meteoric rise from a war-torn nation to the world's 11th'-largest economic powerhouse, with a gross domestic product larger than Thailand, Indonesia, and Malaysia combined, has also finally brought down the South Korean economy. As a result, two days ago, the South Korean government had to eat its words that it would never seek aid from the International Monetary Fund and had to suffer the international ignominy of seeking a US$20 billion bailout from the IMF.

It is noteworthy that the South Korean won had depreciated by more than 20 per cent since January while the Malaysian ringgit had depreciated by more than 40 per cent.

One international magazine, in a survey of the Great Asian Stock Market Crash ending on October 31 which had seen an amazing US400 million losses in values in the Asian stock markets - which would be very much higher if the continuing stock market turmoils in November are taken into account - have this piece of gratuitous advice for Malaysia as to what needs to be done to bring about a national economic recovery:

We need not be slavish and accept uncritically all the views and opinions in the international media, as if they represent gospel truth, as there are a lot of falsehoods, misleading statements and bias in foreign media reporting.

However we should not go to the other extreme of regarding everything written in the international media as sheer rubbish and not worthy of any attention.

While the DAP supports Datuk Seri Dr. Mahathir Mohamad and the Government in advocating regulations to curb untrammelled speculation and manipulation in the global currency markets, this should not become our primary preoccupation. It is even more important and urgent that the government find answers as to why the ringgit had nosedived from RM2.6475 to RM3.4885 to a dollar while the KLSE CI had crashed from 1,041.26 points to 560.09 in the past four months from July 26 when Mahathir named George Soros as the "rogue speculator" till last Friday on November 21.

When he named George Soros as the foreign financier who had upset South-East Asian currencies in order to pursue his own political agenda, Mahathir said George Soros with his few billion dollars had undone what Malaysia had worked for 40 years in just two weeks.

I do not wish to re-open this subject, but to point out that the fall in the ringgit and the stock market in the last four months is even sharper and greater than in those "two weeks" in July when George Soros allegedly undid what Malaysia had worked for 40 years!

On 30th June, the exchange rate of the ringgit was 2.5238 to a dollar; on July 26, it was 2.6475, but last Friday, it had crashed to RM3.4885 - at one time touching the all-time low of 3.53. The KLSE CI was 1,077.30 on June 30, 1,041.26 on July 26, but it had crashed to 560.09 last Friday, at one time touching the all-time low of 512.41 - short of crashing through another 500-point psychological level within a week.

The Government should not be seen to be only concerned as to why the ringgit and the stock market experienced a sharp fall in the two weeks in July, while not equally or more concerned as to why the ringgit and the stock market underwent even sharper and greater fall in the past four months.

While Malaysia should continue to press in world forums for international rules to regulate the global currency markets, our topmost agenda must be to stop the downward slide of the ringgit and the stock market and to get the national economic recovery seriously on track.

Malaysia is gaining the unfavourable reputation of wanting to pin all blames for our national economic crisis on external factors and this would be a major flaw in any national economic recovery efforts in the country.

Such an attitude would also make it difficult to prepare Malaysians to face the severe pains when the real economy is hit by the national economic crisis in the coming months - as indicated by warnings of price increases for essentials like sugar, cooking oil, potatoes and flour after the Chinese New Year and Hari Raya celebrations.

The latest "Country Risk Report" on Malaysia by the Hong Kong-based Political and Economic Risk Consultancy Ltd., dated November 4, 1997 had given the following two warnings:

These are warnings Malaysia must give serious heed if we want to succeed, not only in our effort at national economic recovery, but in transforming Malaysia into a world-class nation in the new millennium through a leapfrog from an industrial-based to an information-based economy.


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