The first condition to restore confidence is for government leaders to stop giving simplistic reasons for the economic crisis

Media Statement
by Lim Kit Siang

(Petaling Jaya, Tuesday): At the opening of the People’s Progressive Party annual general meeting on Saturday, the Prime Minister, Datuk Seri Dr. Mahathir Mohamad reiterated that Malaysia’s "economic problems were actually caused by the deliberate depreciation of the currency by foreigners".

The National Economic Action Council (NEAC) executive director recently told the Far Eastern Economic Review that the country’s "primary task is to restore confidence".

The first condition in restoration-confidence is for government leaders to stop giving simplistic reasons for the economic crisis, as blaming speculators like George Soros for being the cause of the country’s economic turmoils.

Was Mahathir right when he blamed George Soros and the currency speculators as chiefly responsible for Malaysia's economic and financial crisis and the depreciation of the Malaysian ringgit?

Mahathir should be more attentive to the views of others on this issue, including his "Strategy Guru", Kenichi Ohmae, who is also a member of the International Advisory Panel (IAP) on the Multimedia Super Corridor which is chaired by Mahathir himself. Ohmae does not subscribe to Mahathir’s theory that the George Soros are the culprits of the economic crisis. In the Asiaweek 1997 Special Collectors' Edition, Ohmae said that the Southeast currencies including the ringgit were overvalued and whether there was George Soros or no George Soros, the currency adjustments would have taken place.

Ohmae wrote:

In the latest publication entitled "The Current Crisis in Southeast Asia" by Manuel F. Montes, published by the Institute of South East Asian Studies, Singapore, the author, who is a co-director of a project of the United Nations University/World Institute for Development Economics Research (UNU/WIDER) in Helsinki, Finland, said there are at least four competing explanations for the onset of the economic crisis in South East Asia.

Stated in stark, mutually exclusive terms, these four explanations are:

Manuel Montes wrote that a combination of these factors is undoubtedly more accurate, though it is important to identify the key factors and prioritize these explanations in order to recognise how they are related to each other and to identify which of these explanations apply to which country and to what extent.

In focussing the cause of the economic crisis on George Soros and the currency speculators, was Mahathir doing justice to the gravity of the crisis as well as to his own credibility?

Professor Dr. Walden Bello, Co-director of Focus on the Global South at the Chulalongkorn University, Bangkok as well as Professor of Public Administration and Sociology at the University of Philippines, in his article "Addicted to Capital: The Ten-Year High and Present-Day Withdrawal Trauma of Southeast Asia's Economies" also referred to the Mahathir-Soros debate, where he wrote:

While it is agreed that there is urgent need for international agreement on controls of the capital flows, whether it be in the form of the "Tobin Tax", a transaction tax imposed on all cross-border flows of capital that are not clearly earmarked as direct investment to help slow down the frenzied and increasingly irrational movements of finance capital, or any other form, the government should stop giving simplistic explanations for the cause of the economic crisis to safeguard its own credibility and enable a quick restoration of confidence.


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