(Petaling Jaya, Sunday): Yesterday, at the MCA briefing of the economic situation to Chinese community leaders in Malacca, MCA President and Transport Minister, Datuk Seri Dr. Ling Liong Sik spoke of a national economic recovery in six months because of signs of improvement in the stockmarket and the Malaysian ringgit as well as the return of foreign funds.
This is a very surprising message when the Kuala Lumpur Stock Exchange Composite Index had started on another downward slide on Thursday and Friday, falling from 590.55 points on Wednesday to 558.57 points, and taking into account that the KLSE CI reached its lowest point of 477.57 points during the present economic crisis only two weeks ago on January 12. A year ago, in January 1997, the KLSE CI ranged between 1212.55 to 1244.13 points.
The same applies to the Malaysian ringgit, which has again started on the downward slide from Tuesday to Friday, weakening from 4.2050 on Tuesday to 4.5500 on Friday against the US dollar, and it was on 7th January that the Malaysian ringgit reached the all-time low of RM4.8820.
With the Indonesian economy in a free-fall, where the Indonesian rupiah could fall from 12,000 rupiah to 16,000 rupiah against the US dollar in one day, and where the International Monetary Fund is itself facing the greatest crisis of credibility and confidence in its history as to whether its earlier second rescue of Indonesia could work, and whether there would have to be a third IMF rescue of Indonesia, dragging the whole region down with it, it is very brave for anyone to talk about an economic recovery in Malaysia in six months.
All over the region, there is bleak news about retrenchments and loss of jobs, figures ranging from two to ten million in Indonesia, one million in Thailand and one-and-a-half million in South Korea.
Singapore is also not spared, with the news yesterday of the retrenchment of 1,800 workers by Seagate in Singapore and the report of a Malaysian who had been retrenched in Singapore committing suicide. Singapore expects to retrench 30,000 workers by the end of the year - many of whom would be Malaysian workers - which is a far higher figure than the annual average retrenchment of 12,000 workers during the recession in the eighties.
The government has not given consistent figures about the problem of retrenchments in Malaysia. On Dec. 5, the Deputy Prime Minister, Datuk Seri Dr. Anwar Ibrahim talked about the loss of 200,000 jobs, but early this month, the Deputy Home Minister, Datuk Tajol Rosli talked about the loss of one million jobs and the repatriation of one million foreign workers.
Although the Prime Minister and the Deputy Prime Minister later clarified that there would be no forced repatriation of foreign workers, these contradictions have only created confusion and anxieties among Malaysians.
The CNN today reported a recent study by the Economic Policy Institute on "American Jobs and the Asian Crisis," which predicted that the earnings losses for U.S. companies from the Asian economic turmoils could drive up the U.S. trade deficit by as much as $200 billion over two years, and put as many as 2.1 million people on U.S. unemployment rolls.
With this bleak regional and international economic backdrop, is it wise for Ministers to go round the country talking about economic recovery in six months when the people should be told to be prepared for the worst six months of the national economic crisis?
I call on the National Economic Action Council (NEAC) to summon a meeting of political leaders and economists to reach a national consensus as to whether there could be an economic recovery in six months’ time so as not to cause confusion or undermine public confidence by giving the impression of an attempt to downplay the economic crisis.
In this connection, the avoidance of the words "economic crisis" is increasingly being noted, as the Ministers only refer to "economic problems" rather than "economic crisis".
The NEAC should set the example of being frank, honest and truthful and call a spade and spade, by telling the people forthrightly that what the people are facing is no less than the worst economic crisis in Malaysian history, which calls for national unity and resolve to overcome and to achieve a national economic recovery in as short a time as possible.
I have just seen the transcript of the press conference statement of the IMF managing director, Michel Camdessus, in Kuala Lumpur on January 16, 1998, which was given front-page headline by all newspapers the next day that he had said that Malaysia did not need IMF help.
Reading the press conference transcript, it is clear that Camdessus’ statement that Malaysia did not need an IMF bail-out was not as unqualified as Malaysians had been led to believe.
"Like other countries, Malaysia has experienced serious pressures in financial and exchange markets, reflecting contagion effects from other countries in the region and--despite in many ways strong economic fundamentals--concerns about its own macroeconomic vulnerabilities. Over the past several months, the authorities have taken important preemptive measures to address the situation, particularly on the fiscal side, notably in last month's economic package, which I applaud. However, given the continued volatile market situation, I believe that there is a need to strengthen policies further--particularly on the monetary side--to achieve a better policy mix, underpin the restoration of market confidence, and thereby ensure a rapid return to exchange rate stability and sustainable growth. Malaysia does not necessarily need an IMF-supported program to achieve this. Our efforts, rather, are directed at providing whatever advice and technical assistance we can to support the Malaysian authorities in putting together their own comprehensive economic program, including measures in such areas as financial sector reform and structural policies. To this end, an IMF team has started the annual Article IV consultation, and will discuss formulation of a comprehensive package."
There is a lot of difference between "Malaysia does not need an IMF programme" and "Malaysia does not necessarily need an IMF programme".
DAP remains committed to the position that Malaysian should cherish our national economic sovereignty and integrity and should resolve our own economic crisis without seeking IMF bail-out, but Malaysians should be told the truth, including the bad news, which is better than being told half-truths or untruths. It is the failure to tell Malaysians the truth, however unpleasant or unpalatable, which has resulted in the serious problem of information deficit which is one root cause for the crisis of confidence in the country.