(Petaling Jaya, Friday): Malaysians, whether from the government, the opposition or the non-partisan, must feel very pleased when they read the local press this morning, with a typical headline like "3 pc growth forecast for Malaysia by institute" (New Straits Times).
The Washingon-datelined report said that the Institute of International Finance (IIF) has projected that Malaysia's growth will recover to about three per cent this year.
This is fantastic news, as it is much higher than the official Malaysian growth forecast of one per cent which was repeated by the Finance Minister, Tun Daim Zainuddin, only three days ago when he said that one "should be happy with that, after a minus of almost six percent" for the economic growth in 1998.
However, when I checked the website of the IIF, the global association of financial institutions with more than 300 member organizations, (http:www.iif.org), I found that Bernama had not given a honest, full and accurate report.
The reference to Malaysia in the IIF press release on its report on
Capital Flows to Emerging Market Economies entitled "1999 Capital Flows
To Emerging Markets Expected To Stabilize At Subdued Levels"
is as follows:
"As growth picks up, the IIF forecasts that net flows to Asia will double to $33 billion this year. The upswing is partly due to the prospect of moderating net outflows from the five Asian crisis countries (Indonesia, Malaysia, South Korea, Thailand and the Philippines) down to $4.8 billion from $28.3 billion in 1998. The IIF states, however, that these five countries combined are likely to see a significant revival in net equity investment to $18.7 billion from $8.5 billion last year."
The IIF Report forecast "a likely return to modest positive growth of 2 to 3 per cent in South Korea and Malaysia, each of which is estimated to have experienced a fall in output of about 5 per cent in 1998".
Considering that the IIF Report is forecasting a negative growth of five per cent for 1998 when the government is now expecting a negative growth of at least six per cent while the International Monetary Fund had just forecast a negative growth of from 7.5 to 8 per cent for the Malaysian economy last year, readers will draw their own conclusions as to whether the IIF forecast of "2 to 3 per cent" positive growth for Malaysia in 1999 is likely to be at the higher or lower end.
But Bernama had been irresponsible in not giving a honest, full and accurate report of the IIF forecasts.
It would appear that the national news agency would report only good news, even embellishing them to look better, while not reporting bad news.
When the IIF Report 1998 was released on 29th January 1998, grouping Malaysia with Indonesia, Philippines, South Korea and Thailand as "the five economies most affected by the Asian crisis" and forecasting that there would be a continued private capital outflow from these five countries to the tune of US$9.4 billion, the report was ignored by Bernama.
My statement in February last year asking the Bank Negara and Finance Ministry to issue a statement on the implications of the IIF report for Malaysia was not only ignored by Bank Negara and the Finance Ministry, but also by Bernama.
Bernama and the local mass media should present honest, truthful and accurate reports if they are not to lose all credibility among Malaysians.
The Prime Minister, Datuk Seri Dr. Mahathir Mohamad is now at the World Economic Forum (WEF) at Davos, Switzerland to try to regain international investor confidence.
There is no more effective way to regain international investor confidence than for the government to start lifting capital controls as I had suggested during the budget debate in Parliament last October.
(29/1/99)