Welcome UMNO Youth’s recognition that confidence restoration is the single biggest challenge for Malaysia in the seven-month long economic crisis

- Penang DAP economic crisis ceramah
by Lim Kit Siang

(Penang, Friday): Yesterday, UMNO Youth submitted a four-point economic action plan to the Executive Director of the National Economic Action Council, Tun Daim Zainuddin to tackle the present economic problem, namely:

I am not aware that the IMF has proposed any financial bailout package to Malaysia and I do not understand the relevance of first of the UMNO Youth’s four-point action plan.

I welcome however UMNO Youth’s recognition that confidence-restoration is the single biggest challenge for Malaysia in the seven-month-long economic crisis, and this is why in my Open Letter to Cabinet Ministers on 6th January 1998 on the 15 areas in the economic crisis which should be given priority focus by the government, I had put confidence-restoration as the very first item.

In my Open Letter to the Cabinet Ministers, I had said:

For six months in 1997, the "denial syndrome" had reigned supreme in the corridors of power, with one senior Cabinet Minister saying at the end of last year that Malaysia was only suffering from a "mild case of cough" although the country had by then lost more than RM650 billion from both stockmarket and ringgit depreciations, which was two-and-a-half times the country’s Gross National Product (GNP) for 1997.

Malaysians had hoped that they could put the horrible six months of economic crisis of 1997 behind them and start anew with the new year, with the government fully learning from the lessons of the previous year, realise the fundamental importance of restoring public and market confidence and would not do anything to cause any plunge of confidence.

Although external factors were largely responsible for the breaking of new psychological levels in both the stock and currency markets, namely the crashing of the RM4 level against the US dollar on January 5 and the near crash of the RM5 level on January 7 and the crashing of the 500-point Kuala Lumpur Stock Exchange Composite Index level on January 9, the government did not conduct itself with impeccable rectitude to bolster public and market confidence.

The announcement on 9th January of the Foreign Investment Committee (FIC) reinstatement of the waiver to United Engineers Malaysia (UEM) in the highly controversial RM2.34 billion acquisition of 32.6 per cent stake in Renong shattered the painful recuperation for the restoration of market confidence.

This was why Monday saw the unprecedented limit down for UEM after the opening of trading at the Kuala Lumpur Stock Exchange within a minute, plunging by 97 sen from RM3.24 per share to RM2.27 per share.

Renong also plunged from RM1.80 to RM1.30 and was heading for the limit-down of 30 per cent (i.e. 54 sen), when in panic, both UEM and Renong counters were suspended from trading after one minute of opening of the market.

When trading closed today, UEM has fallen to RM1.93 and Renong to 73.5 sen. UEM was one of the bluest of blue chips in the country, reaching a 13-month high of RM24.30 or a fall of 92 per cent from its 13-month all-time high.

Other blue-chips had also suffered as a result of the stockmarket collapse, but none of them had been thrashed like UEM, and the following shows how some of the blue-chips have borne themselves in the stockmarket crisis:

Price at
close yesterday

13 month

fall from
13-month high





























The sharp fall of Hicom, Maybank and TNB from their 13-month high is also because of the UEM-Renong controversy, which had redefined blue-chips making cash-rich companies high-risk counters because they could be raided like UEM to bailout troubled companies like Renong.

UMNO Youth’s call that existing funds should be used to assist bumiputra entrepreneurs revitalise the economy reason for failure to restore confidence so far

It is unfortunate that UMNO Youth, in its four-point economic action plan to restore confidence and put the country on the road to economic recovery dare not take a stand against deals like the UEM-Renong deal which destroyed public and market confidence.

Although UMNO Youth is to be commended for recognising that restoration of confidence should be a priority concern of the government and nation, it is regrettable that it is making calls which make such restoration of confidence difficult.

Instead of calling for the protection of bumiputera entrepreneur interests, UMNO Youth should have boldly taken a national position in calling on the government to protect all Malaysian entrepreneur interests, regardless of race.

UMNO Youth chief Datuk Ahmad Zahid Hamidi was also quoted in the local press today as calling on the NEAC to ensure that bumiputra assets are protected during the current economic crisis and that banks should only be allowed to sell off a bumiputra company to another bumiputra should the company have a concession it cannot fulfil because of a lack of financing.

Zahid said existing funds should be used to assist bumiputra entrepreneurs revitalise the economy.

The economic crisis is going to hit all Malaysians, regardless of race, bumiputra or non-bumiputra. We will be defeating our objecting to rally and galvanise Malaysians to respond as one unit in the economic crisis if we continue to highlight differences and perpetuate discriminatory treatment among Malaysians.

As for the fourth item in the UMNO Youth Action Plan, UMNO Youth is right in urging banking and financial institutions to provide facilities for loans to productive businesses and industries, as the credit squeeze because of the sudden withdrawal or reduction of credit by banks for productive and export-oriented businesses and industries could only damage Malaysia’s chances of economic recovery and future competitiveness.

However, there should be no racial criteria when applications for credit facilities are processed by banks and financial institutions for small and medium-scale industries.

EPF should be an example of accountability, transparency and integrity by giving the nine million contributors all available information about its investment decisions

I have sought a meeting with the EPF Chairman, Tan Sri Sallehuddin Mohamed in connection with increasing concerns from the nine million EPF contributors about EPF investment decisions in the financial crisis and to seek an assurance that the best interest of the nine million EPF contributors would not be compromised to bail out any troubled stocks or companies.

Between Sept.30 and Oct. 31 last year, EPF bought 65.91 million shares in UEM. UEM traded between RM11.50 and RM7.90 during the month of October. It has been calculated that EPF would have forked out a total of RM645.53 million for these UEM shares and could have lost over RM500 million as a result of the plunge of the UEM share price after its proposed acquisition of 32.6 per cent stake of Renong.

In October, EPF also bought 5.91 million shares in financial group AMMB Holdings Bhd. During this time, AMMB's highest close was RM8.50 and its lowest, RM5.45. Today AMMB has dropped to RM2.12 , or about 70 per cent off its average closing price in October - involving another multi-billion losses for the EPF provident fund.

I understand EPF had been very active, buying shares in about 20 companies, following the announcement by the Prime Minister, Datuk Seri Dr. Mahathir Mohamad in early April of a RM60 billion rescue fund to prop up the share prices by making use of the EPF, Khazanah Nasional Bhd, Pension Funds and Permodalan Nasional Bhd.

Although adverse public market reactions prevented the full deployment of the RM60 billion rescue fund, it is no secret that some billions of ringgit had been committed for this purpose, and the nine million EPF contributors are legitimately concerned as to the extent of drawdown of funds from the EPF for this purpose.

This is particularly so as when Mahathir announced the RM60 billion rescue fund, the KLSE Composite Index was in the 820 point region. Today's kLSE CI closed at 539.97, a loss of over 34 per cent. I hope Sallehuddin would not send out a wrong message in refusing to make the EPF a model of accountability, transparency and integrity by giving the nine million contributors all available information about its investment decisions.

I have been given to understand that I would know on Monday whether Sallehuddin is prepared to meet DAP MPs to discuss the important issue of the EPF investment decisions during the economic crisis.


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