DAP calls for emergency meeting of  Parliament to debate the negative GDP growth of -1.8 per cent in the first quarter 1998


Speech
-  Sympathy, Support and Solidarity 
with Lim Guan Eng Ceramah, Bt. Mertajam

by Lim Kit Siang  

(Penang, Saturday):  The worst fears about the Malaysian economic crisis has now been proved right and all the talk in January about economic recovery in six months by the Prime Minister, Datuk Seri Dr. Mahathir Mohamad and even more shocking, about economic recovery in three months by the MCA President and Transport Minister, Datuk Seri Dr. Ling Liong Sik, have proved to be mere pipe-dream.

On 11th May, I had issued a statement asking the government to state its stand on the Asian Development Bank’s  recent forecast that the Asian economic  crisis was likely to be much deeper and drawn-out than  generally expected as  its latest annual report had   warned that "while the brunt of adjustment is likely to be felt in 1998 -- some economies will actually contract -- it may be several years before normal growth patterns reappear".

The Institute of International Finance (IIF), a global association of financial institutions with over 280 members based in Zurich, Switzerland, had come out with even more sobering forecasts.   Contrasting with claims by the International Monetary Fund that the worst of   the Asian crisis might  be over, IIF research director Gregory Fager  had suggested that a chain reaction of adverse economic events was only just beginning to unfold in the region.

The IIF  (whose forecasts have often been more bearish but proved more realistic than those of official bodies) warned of a  real GDP contraction of 2 per cent for  Malaysia this year.

There was silence from the government to my query.

Two weeks later, I referred to the avalanche of bad news and adverse reports about the Malaysian economy such as the forecast of  United Kingdom research house, Independent Strategy, that Malaysia’s economy this  year would contract by 1.4 per cent in contrast to the government’s latest forecast of 2 to 3 per cent growth this year and the forecasts  of  private economists that Malaysia's Q1 growth will come in at between minus one per cent and plus 2 per cent.

These pessimistic forecasts about Malaysia’s economic performance were in sharp contrast to the rosy picture presented by the Government. Now it is established that the true position was even worse than these pessimistic forecasts.

Bank Negara today announced that 1st quarter 1998 GDP is -1.8%, the first decline in 13 years. Dr Zeti Akhtar Aziz of Bank Negara  said she is not optimistic about significant growth in the 2nd quarter. Two successive quarters of negative GDP growth would indicate a very strong possibility of the start of a recession.

Bank Negara  also said that non-performing loans (NPLs) rose to 10.6% in April from 6.7% in December 1997. In absolute terms, NPLs increased from RM28.3 billion in December 1997 to RM44.3 billion in April.

With these bad news, I fear for the Kuala Lumpur Stock Exchange when it  opens Monday and I hope that it would not register a new low in the 11-month economic crisis in the coming week, which was 477.57 point for the KLSE Composite Index on 12th January, 1998.

There should be an emergency meeting of Parliament to debate the latest batch of bad economic news, in particular the -1.8 per cent economic growth in the first quarter 1998.

NEAC should  justify its existence - why it had failed to restore confidence although Mahathir had spoken about economic recovery in six months to a year in January

The time has  also come for the highly-touted National Economic Action Council (NEAC) to justify its existence.  When the Prime Minister, Datuk Seri Dr. Mahathir Mohamad first announced the setting up of NEAC, it was presented as a high-powered emergency saviour for Malaysia which will tide the country through the worst economic crisis in the nation’s history.

However, instead of being the "saviour" of the Malaysian economy, the Malaysian economy has threatened to go into a recession. Even worse, the NEAC had never prepared Malaysians to face the horrendous prospect of a GDP contraction of -1.8 per cent in the first quarter of 1998.

Three days ago, the Economic Adviser to the Government and NEAC executive director, Tun Daim Zainuddin said the NEAC was finalising its National Economic Recovery Plan (NERP) which will outline  measures and strategies to boost the economy, which would be made public  once the government has given its approval.

This is most shocking.  In early January, the Prime Minister, Datuk Seri Dr. Mahathir Mohamad, told the whole nation that there would be economic recovery from six months to a year.

 Malaysians presumed that Mahathir had such confidence because the NEAC must have some magic formula under the leadership of Daim Zainuddin to effect an economic turnaround and recovery.

The NEAC should justify its formation and existence - why it had failed to effect economic recovery or  even to finalise a national recovery action plan to restore confidence, or even to prepare Malaysians for the prospect of an GDP contraction of 1.8 per cent in the first quarter 1998.

 (30/5/98)


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