(Penang, Saturday): On Wednesday, the Prime Minister, Datuk Seri Dr. Mahathir Mohamad said that local bank interest rates had risen because depositors were shifting money from local to foreign banks.
Commenting on the warning by the Deputy Prime Minister, Datuk Seri Anwar Ibrahim a day earlier that interest rates were set to rise, Mahathir said:
"There is a problem . . . because when people take their money from our banks and put it in foreign banks, then our local banks have to borrow from foreign banks. So there is double interest. If they keep in the local banks and don't withdraw, then cost of money will be lower. The problem is cost of money, not interest rates. When we want to borrow, the Malaysian banks have to borrow from the foreign banks, and then of course the interest rates go up".
In order to ensure a speedy economic recovery, the Prime Minister has called on Malaysians to sell their properties in countries where currencies are higher than the ringgit and keep the funds in local banks to increase the country's foreign reserves as well as to convert their valuables like jewellery and property into cash and deposit them in local banks.
As part of the confidence-restoration exercise, there should also be a national campaign to convince Malaysians who have shifted over RM20 billion funds from local banks to foreign banks in the past few months to redeposit them back in the local banks.
For this purpose, all political parties should co-operate as one team to work out a common strategy to convince Malaysians to re-deposit in the local banks the over RM20 billion funds which they have shifted to foreign banks in the past few months at much lower interest rates.
The National Economic Action Council (NEAC) which is tasked with the responsibility of restoring confidence should convene a meeting of all political parties to persuade Malaysians to redeposit in local banks the over RM20 billion funds they had shifted to foreign banks - which would be a very powerful signal nationally and internationally of restoration of confidence in the banking and financial system.