Daim must work doubly hard to restore confidence in the NERP after it has failed three initial tests in two days


Media  Statement
by Lim Kit Siang  

(Penang, Sunday): Last Friday, I said that in the next seven to  ten days, DAP leaders will be making daily responses to the National Economic Recovery Plan (NERP) released by the Special Functions Minister, Tun Daim Zainuddin outside Parliament last Thursday, as DAP MPs have up to now not received copies of the "Agenda for Action" of the National Economic Action Council (NEAC).

On the third-day DAP response to the NERP, I would like to call on Daim to work doubly hard to restore confidence in the NERP after it has failed three initial tests in two days:

There have been a slew of bad economic and financial news both on the local and international front, and the release of the NERP has not relieved the gloom in the Malaysian economic landscape.

The worst news, which is a blow to the government’s efforts to attract foreign money into the  ailing economy, is undoubtedly the announcement that rating agency Moody's Investors Service Inc. had on Friday  cut Malaysia's credit ratings by three notches above "junk" status, a rating normally reserved for risky corporate ventures.

Moody’s cut of Malaysia’s long-term foreign currency ceiling for bonds and notes by three notches from A2 to Baa2  could undermine the country's efforts to recapitalise its banking sector.

The agency also slashed the foreign currency bonds ratings of the government of Malaysia from A2 to Baa2, a mere two notches above speculative grade. It further cut ratings for three banks - Malayan Banking, Bank Bumiputra and Public Bank -  and two companies, i.e. Petronas and Tenaga Nasional.

The Malaysian government, like the governments of Thailand, Indonesia and Korea, had hoped to seek funds from the international bond market to shore up its troubled banking sector.

The bonds, to be guaranteed by the government, were to be utilised by Malaysia's bad loans company, Asset Management Company, to buy up assets and non-performing loans weighing down Malaysia's banking sector.

Moody's downgrade could make it more expensive for the government to issue bonds to raise funds, making local  cash-rich institutions like the RM160 billion Employees Provident Fund attractive targets for the  policymakers as sources of  funding for the recapitalisation of banks and bail-out of troubled companies.

As a result of the adverse downgrading of Malaysia’s credit ratings, both the Finance Minister, Datuk Seri Anwar Ibrahim and the Special Functions Minister, Tun Daim Zainuddin, have postponed indefinitely their fund-raising trips overseas.

The foreign press have reported an aide to the Finance Minister as saying that  Anwar’s trip to the United States and Europe, planned for next week, has been postponed indefinitely. He did not say when the Finance Minister’s trip to Zurich, London, Washington and New York would be rescheduled.

A concurrent trip by Daim Zainuddin for fund-raising abroad has also been postponed.

Moody's adverse credit  ratings action reflects the  lack of international investor confidence in the Malaysian economy, as it  projected Malaysia's GDP to contract by 4 to 5 per cent in 1998, due to drastic adjustments following currency depreciation, large capital outflows and declining asset prices. It doesn't expect the regional economic environment to improve significantly for some time.

One way to restore confidence in the NERP is for Daim to present it in the Dewan Rakyat for Parliamentary approval and legitimacy after a full parliamentary debate.

I find it very  sad that Barisan Nasional MPs do not feel outraged or even offended that Parliament has been by-passed and belittled by the manner of the release of the NERP - when in the past, every Malaysia Five Year Plan and the longer-term Outline Perspective Plans have all been presented in Parliament to seek  approval.

The  Barisan Nasional MPs were not serious at all when I protested in  the Dewan Rakyat last Thursday at the contempt to Parliament shown by Daim in releasing the NERP outside Parliament when the Dewan Rakyat was in session and was on the same day debating the 1998 Supplementary Supply Bill.

Instead, the Barisan Nasional MPs were more interested in playing "political games" shouting "KOKS" to try to distract parliamentary attention from the important issues I was raising in Parliament.  In fact, for the past two weeks of parlimentary meeting, some UMNO, MCA and Gerakan MPs had been shouting "KOKS" whenever I rasied burning issues close to the heart of the people.

Last Thursday, the Chairman of the Barisan  BackBenchers Club, Ruhainie Ahmad, was again interrupting me with his "KOKS" interjections during my speech, which prompted me to ask whether he supported "KOMM" or "KOAI", and challenging him to  publicly declare his stand.

I told the Barisan Nasional MPs that there is "KOKS - Knock Out Kit Siang" but there is also "KOMM - Knock Out Mahathir Mohamad" and "KOAI - Knock Out Anwar Ibrahim" and I advised Ruhanie  that he would have to take a stand either for KOMM or KOAI and that there was no third option - or he would even lose his present positions as BBC Chairman and Chairman of Bernas.

Ruhanie wriggled, twisted  and turned when  I pressed him to clearly and courageously declare his support for KOMM or KOAI and not to wait to see which is likely to be the winning side  and then swing his support for it - but it at least have the effect of silencing the Barisan Nasional MPs and stopped them from yelling and shouting about KOKS in the Dewan Rakyat.

I find it tragic that at a time when the real economy is beginning to hit very hard on the people, whether in terms of inflation, retrenchments, unemployment, drastic drop in standards of public services and essential utilities, Barisan Nasional MPs were more interested in indulging in KOKS political games in the Dewan Rakyat.

I hope the Barisan Nasional MPs would endorse my proposal that all MPs should be given a copy of the NERC tomorrow and that Parliament should be extended for another week so that there could be a  four-day  debate on the NERC.  I expect the NERP to be tabled in Parliament for all MPs tomorrow, or it would be a continuing sorry saga about the NERP.

The series of nation-wide DAP forums on "National Economic Recovery Plan - One Year Of Worst Economic Crisis" is likely to be launched in Kuala Lumpur next Thursday on August 6 and we will invite Daim Zainuddin to officially launch this series, which will enable him to explain the NEAC’s "Agenda for Action", to listen and respond to public reactions and feeback to make it into a People’s Plan and not just a plan of a handful of people lacking in legitimacy and credibility.

(26/7/98)


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