Finance Minister Anwar Ibrahim should present a fourth 1998 Budget in Parliament on July 13 and admit that Malaysia is facing a recession and that there would be negative GDP growth this year


Media  Statement
by Lim Kit Siang  

(Petaling Jaya, Tuesday):  Although the Kuala Lumpur Stock Exchange Composite Index (CI) rallied yesterday closing  5.10 points higher than the previous day to end at  450.77 at the end of trading, the Malaysian ringgit plunged to a new low of 4.1700/900 to the US dollar  since the strengthening of the Malaysian currency in January after falling to a historic depth of  US$1= RM4.88.

Although regional factors like uncertainties over the Japanese yen were negative market factors, the Malaysian markets should have been upbeat especially after two weekend developments, namely:
 

 
 These two developments should have provided a fantastic fillip to investor confidence but yesterday’s stock and money markets proved otherwise and this itself should be serious food for thought for the Prime Minister, Datuk Seri Dr. Mahathir Mohamad, who seemed to have wrested control over the economic management policy from his deputy and Finance Minister, Datuk Seri Anwar Ibrahim after the UMNO General Assemblies the previous week.
 
 Mahathir has been proved right that when he opened his mouth, market confidence plunged.  In his interview with the latest issue of  Far Eastern Economic Review,  there was this startlingly frank admission by Mahathir on the effect of his speeches and statements on market confidence. When asked whether some of his comments had exacerbated the economic crisis, Mahathir said:
   
 Asked whether his "comments last summer led to a loss of confidence", Mahathir replied:
   
 To the question " You said yourself that you opened your mouth and it caused the ringgit to drop", Mahathir replied:
   
 Malaysians are very perturbed by Mahathir’s interview with the Far Eastern Economic Review as it signifies a very unrepentant and truculent Prime Minister who is prepared to take on the whole world regardless of the consequences to the Malaysian economy.
 
 With the appointment of Daim as the virtual Finance Minister, Mahathir seems set on a new phase of economic crisis management which can only alarm investors, both national and international.  The Cabinet should seriously consider whether it is in the interests of the nation to embark on such a new phase.
 
 The Singapore Government yesterday slashed its economic forecast to between 0.5% to 1.5% this year from an earlier downward revision of its projection of between 2.5% to 4.5%.

I call on the Finance Minister Datuk Seri  Anwar Ibrahim to  present a fourth 1998 Budget in Parliament on July 13 and admit that Malaysia is facing a recession and that there would be negative GDP growth this year.

Economists are almost unanimously agreed that the government’s forecast of 2 to 3 per cent GDP growth this year is unrealistic and unachievable.

The Malaysian Institute of Economic Research (MIER) executive director, Dr. Mohamad Ariff Abdul Kareem said very categorically that Malaysia was going into a recession.  MMS International Standard & Poor’s in Singapore is looking at a minus 5% growth this year.

(30/6/98)


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