Date: Sun, 13 Sep 1998 05:21:47 +0800
To: Saudara Datuk Seri Anwar Ibrahim
From: J. Tugauwemail@example.com
Subject: The Malaysian Dilemma
THE MALAYSIAN DILEMMA - THE DISEASE AND THE CURE
by D.P. Pangai
The current dilemma in the form of the economic crisis that Malaysia faces raises more
questions perhaps than answers, questions which largely it would appear the Malaysian
government does not want to ask or be asked and answers which it cannot or will not
provide nor will listen to.
Who is to blame for the crisis, is it the dastardly currency speculators(as the Malaysian
government - or rather, Mahathir - claims) or the inherent self-induced structural
weaknesses of an over-heated and silently ravaged economic system? Was it just a
bubble which burst like all the other bubbles in Asia?
Is it the undeserved result of a Zionist plot (part of a wider scheme to undermine the
whole ASEAN/Asian region and to further a nefarious globalist agenda) or the deserved
ultimate and inevitable outcome of years of systematic economic buccaneer,
plundering and looting by the locals themselves?
How was this up and coming economic tiger of the East brought to its knees? Can it
avoid being floored? Why have all efforts by the Malaysian government not succeeded in
restoring investors' confidence? Are these efforts enough or can more be done? Can
Malaysia avoid going begging to the IMF? What does all of this say of the Malaysian
economic regulatory system as well as its political system? Will what happened to
Suharto-be-fall Mahathir (who is of course dead determined to buck the trend)? Is there
any real difference between Mahathir and Anwar? These and a host of other questions
need answers if Malaysia wishes to get out of its dilemma.
The answers will determine whether ordinary Malaysians can overcome their political
apathy and inertia to either change their government or force it toward greater
accountability. It has become as clear as the light of day that the Malaysian government
has to take a larger portion of the blame even if foreigners can also be blamed.
Its policies only appeared to be good, but their implementation left a lot to be desired
while mismanagement and plain robber baron mentality sapped the system and
ensured that it was a disaster just waiting to happen. One thing is certain, and that is if
Malaysians want to get over the economic crisis they must first rid their country of the
powerful local and foreign vested interests that continue to hold them hostage without
them becoming hostage to new vested interests.
Can the present Malaysian culture of extravagance be replaced by one of austerity and
sobriety? Can the present neo-feudal political system be replaced by a more responsible
and responsive one? Do Malaysians see the problem and are they willing to do what it
takes to change for the better or will they be convinced by Mahathir's attempts to
obfuscate and side-track the real issues? Those attempts have now taken on a
dramatic and indeed shocking turn over the last few weeks with the sacking of Anwar
from all his government and party posts and from UMNO itself.
If anything, it is Anwar who stood for reformation and has returned to that call. Will
reformation succeed with or without Anwar? Do the people understand what it means?
Can it catch the imagination of the majority of the Malaysian public in time for the national
elections which Mahathir is expected to call at any time after the Commonwealth Games
or the October Budget?
Does Islam have the answers, and can Anwar and his Gerakan Reformasi Rakyat
convince the Malaysian public that it is capable of running the Federal government,
possibly in coalition with PAS and DAP? That appears to be the stark choice facing
Malaysians today - Barisan Reformasi or Barisan Nasional? Take your pick and live with
it at least for the next 5years.
Will Anwar form a political party (now known by the proposed name of Gerakan
Reformasi Rakyat) and can he do it in time? Will Mahathir withhold the purported
evidence against Anwar only to use it to full effect to cripple a Barisan Reformasi led by
Anwar in the elections?
Is it Anwar which is the real issue or is it Mahathir?
Will the people's attention be diverted from the cause of Reformasi by the scandalous
and as yet unproven accusations and allegations against Anwar or will the people play
smart and ignore these issues and focus on the real issues - the rampant corruption,
nepotism and crony ism, abuse of power, lack of transparency, misuse and
mismanagement of public funds and many other significant abuses of the system
perpetrated by the Mahathir regime?
Muslim Malaysians appear to be returning to their religion in droves,driven perhaps more
by the shock of the economic crisis than any other factor, as all walks of life continue to
be affected by a situation which deteriorates daily. The government itself appears caught
in the grip of its own vested interests determined to salvage whatever they can personally
out of the economic and financial straits they find themselves in, even at the expense of
the common people.
Many formerly enriched businessmen linked to the government now find themselves
technically bankrupt, their companies technically insolvent,unable to pay even the interest
on their loans. They continue to blame everyone else except themselves for the whole
situation, hoping that people will forget what they themselves have done to lay the
breeding ground for the problems that now beset them and the country. These are the
cronies whom Mahathir wishes to help using government and public funds at the expense
of the ordinary people.
Most Malaysians say that these people deserve to be in their present predicaments for
their own greed, extravagance, mismanagement, abuse of position and trust, corruption
and lack of charity during good times.None of them will be missed if they went down or
decided to exit. Taking the exit route would of course be least traumatic on the Malaysian
public and one which will allow the much needed corporate, economic and social(and
also political) restructuring and re-engineering to take place as it should - this is
Mahathir the neo-feudal lord on the other hand seems just as determined to cling to
power, maintain the status quo and all its vested interests and to save those accused of
being his and Daim Zainuddin's, UMNO Treasurer and Special Functions Minister's
cronies even though he cannot offer any cogent answers other than to blame it on foreign
currency speculators and to urge the people to unite behind the government and give it
complete trust in its largely undetermined, undefined and ineffective approaches to the
economic crisis. It is the inept Mahathir government which got Malaysia into this mess in
the first place - can or should it be trusted to get Malaysia out of the mess? Will
Malaysians allow themselves to be deceived yet again?
Mahathir has toured the whole country in a bid to explain his version of the economic
crisis to the people. While cracking down on rumours of riots in the central KL market of
Chow Kit which spread like wildfire chiefly on newsgroups through the Internet (for which
4 people have been arrested and detained without trial under Malaysia's Draconian
Internal Security Act - a British legacy meant to be used against Communist insurgents in
the 1950's), the irony is that Mahathir himself has been desperately exhorting the people
not to riot, strike or incite racial and religious disharmony or conflicts. Why the need to do
this if there is no such threat? Or is he himself out to create such a threat, which is
not beyond him?
It is also not beyond Mahathir to see Anwar and the crowds that throng(in the thousands
and even tens of thousands) his residence and other places he visits as a threat to
public order. But it is unlikely that Mahathir will risk arresting Anwar in view of his
continually rising popularity, not unless he is also contemplating imposing emergency
rule,a move which could rapidly backfire and cause the otherwise calm situation to
deteriorate beyond repair.
In a message aimed at PAS and other opposition parties and their supporters and people
generally inclined to disbelieve the government(for which it is now clear they have ample
reason), Mahathir advised the people to continue to practise moderation and to discard
extremism (New Straits Times, 16.8.98). It is also clear that Mahathir himself is
not averse to using the fear of racial and religious extremism to scare the people into
supporting the government. Of course he himself will not see this as inciting racial and
By his definition, anyone who disagrees with him is an extremist of some form or
another. This combined with the purported threat from foreigners bent on stealing
Malaysia's freedom and its political and economic sovereignty represents a highly potent
scare tactic. Will it work this time and will it be potent enough to deceive the
Malaysian people once again? Is Malaysia's national security really at stake here or is this
just another desperate ploy by Mahathir to stay in power by whatever means at his
disposal? Will the will of the people be disposed of or dispensed with?
Will the Malaysian people continue to surrender their future to the self-interested dictates
of Mahathir and his cabal? The likely answer,judging from the crowds, of all colours,
persuasions and creeds, that greet Anwar, is a loud resounding NO!
Anwar Ibrahim, the ex-Deputy Prime Minister and Finance Minister'premature attempt
(as Mahathir saw it) to ease or force Mahathir out of office fizzled out at the last UMNO
General Assembly and has compromised his efforts at tackling the crisis and has now
cost him his position, as Mahathir (who moves fast for a man in his 70's) swiftly moved
tore-establish control over an increasingly divided UMNO. Can Mahathir do enough
damage control with the help of all the yes-men in the party to prevent UMNO and the BN
from losing the next elections? There is a great deal of doubt about this.
Whatever the case may be, two editors of Malay-language newspapers who are linked
to Anwar were forced to resign for voicing opinions and emphasizing news which did not
show the government in good light. Their criticisms centred on lack of transparency and
accountability and the bad effects of the crony capitalism practised by the government.
What they said was true, but they paid the price for their candidness.
They were speedily replaced by Mahathir's choices and the national media is now back
to toeing the official UMNO party and government line with an assiduity which would
surprise even the most obsequious of sycophants. It is little wonder then that people
resort to spreading rumours on the Internet, when the local media is seen as nothing
more than a propaganda mouthpiece of the government.
While the spreading of rumours cannot be supported and must in fact be condemned, the
government which has denied the existence or possibility of riots has itself not fully
explained the unusual presence of Federal Reserve Unit riot police in the Chow Kit area
on the day in question.Perhaps their presence in fact deterred the occurrence of the
riots which would otherwise have occurred, in which case the rumour-spreaders actually
did the authorities a favour (notwithstanding the widespread panic in the capital city which
they also caused in doing so). So far, It is not known whether these rumours were
deliberately spread by those arrested or were spread in a well-meaning but misguided
attempt to warn.
UMNO has since its last General Assembly determined and established that corruption,
crony ism and nepotism do not exist in Malaysia, contrary to what most ordinary
Malaysian know and feel the effects of every day.Malaysia is therefore the cleanest
country in the whole world in this respect, if Mahathir is to be believed.
Zahid Hamidi, the UMNO Youth leader and a staunch Anwar ally, who made the
allegations of crony ism and nepotism being practised by the government at the last
UMNO General Assembly, was practically forced to retract the same and admit that
there was no such thing (after Mahathir had displayed and published a list of hundreds of
Malay beneficiaries of special public-listed company share issues and government
privatization projects (a list in which Zahid himself appeared).
Mahathir himself made the announcement of this retraction after an UMNO Supreme
Council meeting and both Zahid and Anwar (and their supporters)have since then
effectively been silenced. Anwar and his men were thus seen to have been deftly
emasculated by the good doctor. Swifter and more brutal surgery had never been
performed in the Malaysian political arena.The mopping up, though, appears to have
been overdone but then overkill has always been Mahathir's forte. Malaysians cannot
plead ignorance,neither can they say they have not been warned. Expect no quarter
from Mahathir and give none to him.
Now that Anwar is out of UMNO, what will he do and is it possible that his supporters will
continue to follow him out as well? Is a new political party in the offing? Or will Anwar join
PAS where he should rightfully belong, allegations of misconduct notwithstanding. What
is sure is that he needs a far better strategy against Mahathir than that which he has
employed thus far. Are there any in his team who are capable of working out such
Can Anwar and his team avoid making the sort of tactical and strategic mistakes which
Mahathir will only be too pleased to exploit to the fullest? Much is at stake, both for the
victors as well as for the vanquished. For the people of Malaysia, their future now
remains to be determined by the outcome of the battle between the corrupt status
quo and the hopeful reformation.
The Malaysian English and Malay media were thus also castrated in one fell sweep,
allowing Mahathir to say what he liked locally and be reported in the newspapers and on
TV without even the slightest hint of any dissent. The great cover-up which had
experienced a few prior hiccups was thus able to recommence with gusto. As will be
seen, the government had a lot to cover up. Malaysians are now resorting to the coffee
shop sand stalls for the real news, which isn't good news for the government either,
since Mahathir's ears would probably burn if he heard what they(especially the Malays)
have to say. Perhaps the government should now resort to banning coffee shops and
Technically legally speaking, any gathering of more than 4 persons in public can
constitute an illegal assembly under Malaysian law and requires a police permit. Anwar
has been reminded of this - Mahathir would of course seek any opportunity to add illegal
assembly to the unprecedented host of crimes which Anwar - an avowed Islamist -
is alleged to have committed, from high treason and leaking of state secrets to sodomy,
illicit sex, attempted seduction, tampering with witnesses and evidence, obstruction of
justice, abuse of power. Some wags would say that these are quite regular features of
many other Ministers and Members of Parliament in Mahathir's government.
Whatever it is, Anwar has not been charged with anything yet.
Control of the media has allowed the government to push the disingenuous and utterly
false message that unpatriotic locals are undermining the government and the country,
as Daim was recently reported as saying that the most damaging element for the nation
is probably unpatriotic people selling negative and untrue information about the country
to representatives of foreign media (New Straits Times, 16.8.1998). Was this merely
aimed at Anwar and his boys or was Daim laying the scenario for Mahathir's bigger
It is of course easy for the government in power (and in full control of the local media) to
tar and feather even constructive critics as being unpatriotic and traitors to the nation, in
spite of the mounting evidence that it is in fact those in the government themselves who
have abused their positions, are unpatriotic and the real traitors. They are the ones who
are the real damaging element for the nation. Patriotism is always the last refuge of
scoundrels when they have nothing else left to hide behind. This is one of the natural
rules of the neo-feudal politics of power practised by Mahathir, another being divide and
rule (while pushing a purported agenda of unity).
Anwar's medicine in combating the economic crisis was undoubtedly bitter and being
somewhat misguided led to almost immediate contraction of the economy. Instead of
helping the situation, he probably made matters worse. That his policies closely
resembled those of the IMF was not seen as a coincidence. Many ordinary Malaysians
suffered (and continue to suffer) the results of a fierce liquidity and credit crunch, which
the government initially denied even existed.
Mahathir's and Daim's cronies were the hardest hit by the Malaysian Central Bank, Bank
Negara's decision to reduce the non-performing loan limits from 6 months to 3 months
(non-servicing of interest or loan repayment) ostensibly to be line with international
norms. House, hire purchase, project and personal financing came to almost
complete standstill (and have not returned to any sense of normalcy) while Malaysians
battled against rising interest rates, rapidly deteriorating share prices, falling currency
values and uncertainty of property values.Infrastructure projects were put on hold and
many prestigious projects such as the Kuala Lumpur monorail stopped for lack of
Spending on the facilities for the Commonwealth Games went on, however,as the
government strived to find some justification in continuing with the Games to save the
tremendous loss of face and goodwill abandoning the Games would entail, in spite of the
growing realization that many Malaysians were becoming increasingly unable to afford
even the cost of tickets to the Games. Free tickets galore were made available to
the disadvantaged, but many could not even afford (or be bothered) to turn up at the
Games various venues.
Anwar was given the nickname Mr. IMF by Dr. Mahathir in UMNO and openly criticized
for toeing the line and echoing the criticism of diabolical foreigners who wished to
destabilize and control Malaysia's economic and political sovereignty. While no doubt
Mahathir had his own agenda(chiefly his own political survival and the economic survival
of his cronies upon whom he depended) in making these allegations, Anwar's image has
taken a drastic beating (coupled with the as-yet unproven -notwithstanding the existence
of the purported affidavits, witness and other evidence - allegations of bisexual
misconduct against him in a book 50 Dalil Kenapa Anwar Tidak Boleh Jadi PM or 50
Reasons Why Anwar Cannot Become PM widely distributed for free by the official
party machinery itself amongst UMNO members at the last General Assembly and which
has now become subject of a court case for libel with the court granting an injunction
against further distribution until disposal of the case). The judge who granted the
injunction was inexplicably transferred out of Kuala Lumpur at short notice.
Many Malaysians were beginning to feel that Anwar was a lame duck and unlikely to
become Prime Minister notwithstanding his subdued protestations to the contrary at the
time. His sacking from the government has probably given him a far better opportunity to
push the Reformasi agenda from outside rather than within.
Mahathir's resumption of full control has allowed him to prescribe a different and
apparently more palatable (yet still equally ineffective)medicine for Malaysia's economic
malays. The good doctor's medicine was no longer working, however, and there are no
signs that it will continue to be palatable - on the contrary there are indications that
Mahathir in his usual dictatorial style will force-feed that medicine down the throats of
Malaysians (and the rest of the world as well) whether it is the right medicine or not. It
may even turn out to be poison, and the worst fears of most Malaysians will thus be
While all this political drama is taking place, Malaysia's economic woes continue to
remain unresolved and the situation has even deteriorated further and will most likely
continue to do so. The Malaysian Institute of Economic Research made the statement a
few days before the UMNO General Assembly that the worst is yet to come, a feeling
shared by most Malaysians. Malaysians are now left wondering when the final crunch
will come and just how bad it will be.
Mahathir on his part has promised (or threatened) as yet unspecified shocking
measures (currency restriction is so far among the first to be unveiled) to deal with the
economic problems - measures requiring the people's unwavering support and
confidence as he put it. Which comes first, effective action by the government which
restores confidence or confidence that will allow the government to take effective action?
Can Malaysians really have confidence that their government can actually take effective
action? Many doubt it.
Perhaps Mahathir is considering repealing the law of supply and demand.Or is he
considering declaring a state of national emergency, thereby suspending Parliament and
the Cabinet, not to mention the will of the people? Whatever it is, Malaysians will not take
too kindly to any further shocks. Some of it we now know, others we can hazard a few
good guesses, since Mahathir's options are limited, bearing in mind that he has to keep
his men as well as Daim and Daim's boys happy.
As the subdued as well as open voices of discontent among Malaysians keep growing by
the day, the government's response has been to deny flatly all allegations of misconduct
or mismanagement on its part and crack down on dissent. The use of the term Divine
Retribution or bala' has been unofficially banned from the mosques, since this would cast
the blame for the economic crisis on wrongdoing by the government and its cronies.
The thick haze originating from large-scale burning and forest-clearing in Indonesia which
enveloped a large part of Malaysia as well for a couple of months and which started at
about the same time as the economic crisis last year also led to the unofficial banning of
the term haze or jerebu and all discussion of it from the mosques, since this was
again associated with Divine Retribution (of greater concern to the government was
probably the fact that too much publicity about the haze would adversely affect the
Commonwealth Games, Divine Retribution not withstanding). These unofficial bans are
being enforced by the presence of Special Branch police undercover officers who report
any infringement on the part of the khatib delivering the khutbah. The khatibs and imams
are now mostly being seen delivering rather tame sermons, and even resorting to the
official even tamer sermons provided by the BAHEIS (Bahagian Hal Ehwal Islam), the
Islamic Affairs Division also known as Pusat Islam or the Islamic Centre of the Prime
The prolonged water shortage or crisis in many parts of the capital city,Kuala Lumpur
and the surrounding Klang Valley area was again also attributed to Divine Retribution and
added to the government's woes, as did losing the parliamentary seat of Arau, Perlis to
PAS in a recent by-election.
The Kuala Lumpur Stock Exchange key Composite index has recently hit anew 10-year
low of 250+ points, from the 1,200+ points it used to enjoy before the crisis. More than
25 public-listed companies which are insolvent or facing severe losses and cash-flow
problems have sought court protection from creditors pursuant to proposed schemes
of arrangement. Many more will follow, yet the government does not appear to have any
proper response other than to form Danaharta Nasional Berhad,the Asset Management
Corporation, to take over non-performing loans and their related assets from banks, and
attempt to jump-start the economy by pumping large sums of money into strategic
infrastructure projects through a so-called Dana Pembangunan Infrastruktur or
Infrastructure Development Fund.
Cynics say that this is merely a device to put much-needed funds into the hands of the
cronies. We will probably see more of that without Anwar in the government (especially in
the key Finance Minister's post).
The short-term economic benefits remain questionable and may not lead to the desired
spin-offs nor the jump-start which the economy requires and which can only come from
recovery of the stock market and of the ringgit.The economic recovery action plan
unveiled by Daim, recently-appointed Special Functions Minister made all the impact of a
damp squid and failed to impress anyone except the government. This has frustrated
Mahathir,Daim and their cronies and led to their further allegations of a
foreign conspiracy against Malaysia. Perhaps they should also consider the possibility
that it might be a conspiracy only against them and their cabal and that the rest of the
unfortunate Malaysians have just got caught in the cross-fire in this high stakes game.
Recent stock market gains have also had more to do with government
and government-controlled funds being forced to ramp up the market than any other
factor. Confidence has not really returned, in spite of the currency and share market
restrictions imposed by Mahathir.
Even the government's efforts to raise funds through the issue of bonds by the Asset
Management Corporation were scuttled by rating agencies' decisions to downgrade
Malaysia's debt instruments to almost junk bond status (and since the currency
restrictions effectively junk). This has left the government with no choice other than to tap
into the National Oil company, PETRONAS's cash reserves, currently estimated at
RM30billion. But it is apparent that even this will not be enough and what will then be left
for the rest of the country?
An article in the Singapore Business Times dated 15th June 1998 stated that some
simple arithmetic suggests that the AMC, which aims to raise RM25 billion, will not be
able to absorb even half of total NPLs(Non-Performing Loans). So far, the NPL ratio has
hit 10.6 per cent against 6.7 per cent in December last year and less than 4 per
cent before the regional financial crisis. The latest ratio translates into an absolute amount
of RM44.3 billion, a massive jump of RM16 billion from RM28.3 billion in December 1997.
The ratio could touch 20 per cent next year, translating into almost RM84 billion of NPLs
or a staggering 59 percent of real GDP.
It is clear, therefore, that Malaysia will have to come up with more drastic measures to
rehabilitate the economy besides the AMC and the other steps implemented so far.
If other people can see this why can't the Malaysian government, or is it just refusing to
acknowledge the true damage that the country has suffered and will probably continue to
suffer as a result of its mind-numbing bumbling and fumbling? Malaysia seems to have
adopted an official stand of outright denial of any real damage other than that directly
caused by the stock market and currency speculators. There is an almost complete lack
of disclosure of collateral damage. If the damage is not recognized, how is it going to be
repaired? This is another question on the minds of many if not most Malaysians.
The denial syndrome is another real and dangerous factor in the Malaysian Dilemma and
part of the disease which Reformasi needs to cure. The truth behind the Bumiputra
Malaysia Finance scandal of the 1980's, the currency speculation activities of Malaysia's
Central Bank and the mismanagement of PERWAJA, the National Steel Corporation a
few years ago, among many other scandals which the government managed to cover up,
leading to collective losses of almost RM25-30 billion of government funds, among others,
has to this day not become known or been satisfactorily explained in view of denials by
the government and their refusal to conduct proper and independent inquiries.
In the case of the Central Bank, in what can only be termed a massive cover-up, its
currency losses were said to be only paper losses.Malaysia did not lose any real
money then, apparently, but it has now.
The Singapore Business Times goes on to say that Another major area in which
Malaysia may need to revamp its policies is privatization,particularly of infrastructure
Expenditure on such projects, in which the private sector is expected to play a major role,
has been and will continue to be the single largest component of the country's capital
expenditure plans. For instance, under the Seventh Malaysia Plan, which runs from 1996
to 2000, over RM260billion is expected to be spent by the public and private sectors
to build and upgrade the country's infrastructure.
However, the heavily indebted private sector will now be hard-pressed to carry out such
projects. The government will therefore have to find a way to maintain the pace of
development of infrastructure despite this constraint.
One possibility is a two-pronged approach, whereby the government deprivatises some
projects and repackages the terms and concessions of others to make them more
With due respect, the latter proposal would seem like giving the pirates a second chance
to loot and pillage. Even if more equitable terms can be obtained (which is doubtful since
the present circumstances will require them to request for greater concessions thereby
adding to the public'burden), can Malaysians depend on these economic buccaneers to
be equitable? Deprivatisation sounds like a better idea, if the government can get its act
together and ensure that the system is not abused or further abused - which remains
highly questionable. Again Reformasi begins to sound better and better.
People seldom heed the lessons of history thus leading to history repeating itself. In the
case of Malaysia it would appear to have repeated itself with a vengeance and at great
cost. In particular Malaysians had forgotten the lessons of the last recession in the
middle to end of the 1980's.
Malaysians who had rallied together under the clarion call of Prime Minister Dr.
Mahathir's Vision 2020 and the self-deceiving propaganda of Malaysia Boleh! or
Malaysia Can! now find that in their hurry to get to 2020, they took many unwise and
misguided short-cuts, pushed too hard and too fast, failed to implement proper
safe-guards (and even ignored safe-guards that were already there), attracted
unwanted short-term investments which they had no control over and which fled as just as
suddenly as they came in, borrowed too heavily, over-spent on large-scale projects
which now face abandonment or under utilization all at the behest and encouragement of
the government, mismanaged their enterprises and spent large sums for unproductive
purposes. This they all deny, of course, maintaining the deception that what they did
was appropriate and correct for the circumstances at the time.
In fact, the problems Malaysia is facing today - the root cause of the disease - may
perhaps be traced even further back than the mid-1980's to the mid-1970's, when Dr.
Mahathir was then the Deputy Prime Minister.From the time of his appointment in 1975
by Hussein Onn, the Prime Minister, over the heads of two other more senior
Vice-Presidents of UMNO, the main party in the ruling coalition, Ghaffar Baba and
Tengku Razaleigh Hamzah, Mahathir probably knew that sooner or later he would have to
face a challenge from Razaleigh who was then Minister of Finance and was also in a
better financial position and had arguable better support among the grass-roots of UMNO
than Mahathir at the time.
The man Mahathir chose to be the key-man in his defence campaign was Daim and it
was Daim's job essentially to raise the funds which this entailed.Daim's main vehicle for
this purpose was a company called Peremba, which also became the grooming ground
for the young managers who in their 30's in the late 1980's were appointed by Daim to
head large public-listed companies but still reported to him even though he himself did not
appear as a shareholder or director. At the same time he maneuvered himself into control
of Fleet (and directly and indirectly into many other companies as well), UMNO's
investment vehicle, which had before that been controlled by Razaleigh and his men.
Fleet was then in control of the New Straits Times group, the largest media group in
Malaysia and which also owns TV3, the first private TV station in Malaysia.
Under Daim, Fleet made many blind and questionable investments, including the purchase
of a controlling stake in Faber Merlin, a public-listed hotel and property company which
had been mismanaged and bled dry by Chang Ming Thien and which by the mid-1980's
had accumulated losses running into the hundreds of million ringgit. Interestingly, Chang
Ming Thien was also the Chairman of the United Malayan Banking Corporation,UMBC, in
his capacity as a Trustee of MCA (the main Chinese party component of the ruling
People may also still remember him as the Chairman and controlling shareholder of the
Overseas Trust Bank of Hong kong, which collapsed in the early 80's also as a result of
mismanagement, criminal breaches of trust and plain theft (very much the same things
that he had done in Faber Merlin).
UMBC came under the control of Daim's family companies in a manoeuvre under which it
was exchanged for the Malaysian-French Bank which Daim had previously bought. Was
this a coincidence or was it quid pro quo - you scratch my back and I scratch yours? In
Malaysia this became the name of the game. Only those with the right connections to
Mahathir or Daim could jump on the bandwagon and take part in the game. Only
Mahathir and Daim knew the game-plan. All others followed instructions, whether
they understood them or not - this was the new breed of Malaysian professionals, many
of whom were accountants but numbered among their ranks lawyers, engineers,
architects, bankers and others.
These and many other corporate exercises and excesses were the main sources of
funds used to keep Mahathir in power both in UMNO as well as over the country. This
was where money politics in UMNO and the nation reached unprecedented scales.
Hundreds of millions of ringgit were spent on party and national elections. Candidates of
the ruling National Front coalition whose credibility was doubted had to ensure their being
voted in by purchasing credibility and buying votes either with hard cash provided by the
party leadership or from projects and businesses that they had been favoured with.
Mahathir became Prime Minister in 1981 and immediately launched his administration
with the slogan Bersih, Cekap, Amanah or Clean,Efficient, Trustworthy. After a while,
this slogan became a joke and was quietly forgotten in favour of various others from time
to time -Mahathir's government has made a fine art out of sloganeering to divert people's
attentions from what they are really up to. But many did realize what was really going on.
The joke was that clean meant to sweep clean and efficient meant that this clean
sweep was done so efficiently as to leave nothing behind for others except his cronies,
while the only trustworthy aspect of his administration was that it could be trusted to
keep the clean sweep a secret. At the same time, high levels of borrowing were also
used not only to finance these purchases and corporate exercises but also to sustain
operational shortfalls caused by these exercises.
What many Malaysians failed to realize then is that this sick joke was on them.
Whatever the case may be, it had rapidly become apparent to Malaysians that in
Mahathir they had found a modern-day Fir'aun or Pharaoh, and Daim was his Qaarun.
Anwar was the outsider in the pack and never really found his niche.
It is rather difficult to talk about Reformasi in a den of thieves.
Such exercises came to a temporary slowdown, in fact almost dead-stop,when
recession hit Malaysia in the mid-1980's by which time Fleet's total liabilities had gone
into the billion ringgit range while UMNO had been deregistered (based on a legal
strategy advised by his lawyers and adopted by Mahathir himself) as a result of the fight
between Mahathir and Razaleigh.
UMNO's assets, including its shares in Fleet and other investments, were handed over to
the Official Assignee while Mahathir, who had won by an arrow margin, consolidated his
grip on power by forming the New UMNO and Razaleigh was forced into the opposition
and formed Semangat '46, theSpirit of '46, a reference to the birth of UMNO amidst
opposition to the Malayan Union plan which the British had proposed to impose upon
Malaya after World War II.
The Malaysian and Singapore stock markets crashed in October 1987 as a result of the
collapse of Pan-El, a company which had come under the control of the President of
MCA at the time, Tan Koon Swan, who went to prison in Singapore for certain
wrong doings related to the collapse. Was Tan Koon Swan merely a scapegoat? Could
he have been one of Daim's numerous nominees? Whatever the case, these and other
similar wrong doings were merely the symptoms of the general and wider
disease affecting Malaysian business and politics at the time, and which would return to
haunt Malaysia with a vengeance and at far greater cost almost exactly 10 years later, a
cost which the Malaysian public is not able nor should be made to bear. Reformasi is
beginning to look brighter and brighter.
Malaysian politicians and businessmen had begun digging holes and they could never
really stop as they kept on digging bigger and bigger holes to cover up previous holes. It
became a vicious circle out of which Mahathir, Daim and their cronies never got out of
and the whole country would suffer (is now suffering) as a consequence. The holes
would collectively eventually become so large that even a hole the size of the aborted (or
postponed) Bakun Dam which would have created a lake - or an inland sea rather - the
size of Singapore would not have been enough to cover them all up.
Within 2 years, however, the end of this particular recession was insight for Malaysia,
and Daim as Finance Minister took full credit for masterminding Malaysia's exit from
recession through a series of economic austerity and stimulation measures. These
measures in reality laid the groundwork and (illusory) foundations upon which the
subsequent Malaysian economic miracle was built. As a result, Malaysia's so-called
economic fundamentals were never really as strong as the government made them out
to be, and Malaysia became just as vulnerable to speculative attack on its stock markets
and currencies as countries like Thailand and Indonesia (which were deemed to have far
higher rates or corruption and other abuses).
Mahathir and Daim had far more grandiose plans for Malaysia, and Malaysia's drive
toward industrialized nation status by 2020 was formally launched by Mahathir as his
Vision 2020. A cartoon by Lat,Malaysia's most well-known cartoonist, may have been
more prophetic than people realized then - it showed a man holding tickets with the
words 20big and 20 small in his hand (his version of Vision 2020), referring to
certain gambling schemes run by Magnum, a company controlled by MCA and Sports
Toto, a company controlled by a Daim associate, Vincent Tan,who also controls the KL
monorail project (now re-started with a government soft loan) as well as a controversial
waste disposal privatization project through a company known as Indah Water.
Was it really a gamble, and is it one which Mahathir and Malaysia now appear to have
lost or can Mahathir and Daim still pull a few tricks out of their hats, since as it would
appear tricks are all they have left?
All available information points to the fact that it was a gamble. This damning indictment
can hardly be avoided by anyone having any independence of mind uninfluenced by
foreign agents and local propaganda.
The country's future was put at stake on a scale again unprecedented in its history and
all the not insubstantial gains of the past were also put at risk by imprudent government
policies which actually benefited a few while only appearing to benefit the many. The
inherent inequities of the system thus perpetrated a false sense of progress and
While there were tangible benefits in the form of the new roads,highways, airports,
ports, buildings and other infrastructures, these eventually all had to be paid for by
consumers and other users, who also had to pay for the additional hidden costs in terms
of the moneys which were siphoned out of these projects for political and
conspicuous consumption purposes by a selected few (the cronies).
This was boom time, and all well-connected individuals made money. Those not so
well-connected could only look on and hope for the crumbs that were left behind.
Mahathir, Anwar, Daim and their cronies did not really seem to care one way or the
other, although they kept reassuring everyone that what they were doing was in the
interests of all the people.
As the saying goes, it was not what you knew - your technical know-how -but who you
knew, that mattered in Malaysia at that time. The Economic Planning Unit of the Prime
Minister's Department which was charged with overseeing the privatization process was
the recipient and processor of many privatization proposals became known as the
Economic Photostating Unit as proposals by less-connected individuals and their
companies were rejected but turned up later and were approved under the different
names of better-connected individuals and their companies.
(The head of the Economic Photostating Unit has now been appointed the Governor of
the Central Bank, after the forced resignations of the former Governor and Deputy
Governor which took place before Anwar's dismissal).
The whole process lacked transparency and accountability. There were no official
guidelines for privatization and no process of appeal if one's proposal was rejected or
delayed or just disappeared. Officially, anyone could come out with a proposal and if the
ideas behind it were unique and viability of the project could be established, then that
person or company was given a right of exclusivity to develop and privates such a project.
Unofficially, these projects were only given to cronies and those with the right
connections. Mahathir and Daim controlled or had a hand in almost every privates
project or other projects which required government approval. The lucrative access to the
top leadership of the ruling coalition was selectively blocked and jealously guarded by
the cronies and administrators all the way down the line. The cronies became the new
breed of Muslims, called New Malays or Melayu Baru, a term which was to take on
derisive and negative connotations because of their many misdeeds.
There are many examples of the way existing rules were bent or new rule sand policies
formulated to favour cronies and their businesses. This resulted in the singular failure of
the much-vaunted Malaysian regulatory system. One of these was the manner in which
Halim Saad, then still a young manager who had been groomed by Daim in Peremba,
obtained control of a large chunk of the UMNO assets from the Official Assignee
without any open tender being called, including controlling shares in a
suspended public-listed company known as United Engineers.
Thus these assets were taken away from direct control of the New UMNO and placed in
the hands of an individual who had no official connection with UMNO. Officially Daim as
UMNO Treasurer had no control over United Engineers and other UMNO assets, but
unofficially he had full control and Halim reported to him in all matters. These were open
secrets in Malaysia, and foreigners also came to realize them in time. Mahathir,Daim and
their cronies carried on in full confidence, seemingly unaware but perhaps more uncaring
of the growing discontent among Malaysians that these and many other similar actions
Many other UMNO-related companies - and those which were not as well -fell (or were
arranged to fall) into the clutches of this group of young managers known as Daim's
boys, including Fleet, Landmarks, Peremba (which had been sold to the Urban
Development Authority then sold to Fleet and later was taken over in a so-called
management buy-out). To a man all of them - and later others as well - reported to Daim
who master-minded every scheme or corporate manoeuvre which they implemented. To
document every such manoeuvre (which is possible) would probably require a
The next step was to ensure an ample and continuous source of income from which
political funds could be generated. Toward this end, and as part of the so-called
privatization policy implemented by the government,again without going through the
normal tender process, United Engineers was given the North-South Highway project
(and the right to collect tolls for 20 years) amidst some heavy controversy which the
government managed to brush aside using its parliamentary majority.
This project was leverage through a series of share swaps to enable the takeover of a
score of public-listed companies which today form theReon Group controlled in name
by Halim. The stupid banks (also acting under political instruction) were all too ready to
lend money to support these transactions and the projects that came to be taken over
by companies such as Renong.
So today it should come as no surprise that Renong and other companies in the group
controlled by Halim reportedly have bank borrowing totalling in excess of RM17 billion
and total liabilities which are far greater than this figure. One of them, the Time
Engineering group (with bank borrowings exceeding RM1.5 billion) has already sought
court protection from its creditors while working out a proposed scheme of
arrangement with them. The creditors can expect a huge discount of the debts owing
The irony of it is that until today UMNO has still not repaid to the banks (principally Bank
Bumiputra and Malayan Banking) loans taken for the UMNO HQ building in Kuala Lumpur
- the so-called Putra World Trade Centre and Menara Dato' Onn.
Yet, during the so-called good times prior to the economic crisis,mansions worth
millions were built by Ministers and Deputy Ministers,other ruling party Members of
Parliament and of course their business cronies and furnished with imported furniture and
fittings also worth millions. Lavish and extravagant lifestyles became the norm for the
new elites, the Melayu Baru who hardly a few years ago were still struggling but now
went overboard in their excesses. Life in the villages, of course, hardly changed as much,
and the people in the rural areas - the grass roots and backbone of UMNO - hardly knew
or cared what their leaders were really up to.
Privately, even Anwar and his supporters complained about what Daim was up to and the
fact that Mahathir continued to allow him to carry on. To a large extent they had been left
out of the real goodies, but far less so than the rest of the population (most of whom
are cronies of Mahathir as he himself put it). Dissatisfaction with the resulting inequities
and the possible ill-effects of Daim's deeds became the rallying war-cry of greater social
justice which Anwar and his followers used to justify their increasingly urgent claim to
inheriting the mantle of leadership of UMNO.
All in all, the scenario for the ultimate economic disaster had been set,but the Malaysian
government forged ahead relentlessly and unheeding,seemingly caught up with the
early success of these policies, the implementation of which left much to be desired and
carried within it the seeds of self-destruction. Early warnings (as early as a year before
the crisis) of an overheating economy by local as well as foreign economist sand agencies
were disregarded and brushed aside as the jealous rumblings of envious foreigners and
disgruntled locals who had been left out of reaping the benefits of the Malaysian
government's policies and recipes for economic development. Benefits of course did flow
downward to ascertain extent. This was used to show that the government was
really doing its job and kept the general public satisfied and even lulled into a sense of
The bulk of the initial benefits accrued to politicians and connected businessmen, many of
whom found themselves millionaires and billionaires practically overnight with little effort
other than their connections or the schools to which they had been and being seen in the
right places and at the right time supporting the powers that be, in particular
Mahathir.This sycophantic approach worked for a while, until the short-cuts that had been
taken led to mismanagement and the misuse of public investors' funds for the benefit of
controlling shareholders at the expense of minority investors' interests. Perhaps foreign
investors saw this and were willing to overlook it for short-term gain, but it also
provided them with the real excuse they needed to dump their shares when the market
became too hot, justified or not.
The relevant Malaysian regulatory authorities such as the Economic Planning Unit, the
Foreign Investment Committee, the Securities Commission and the Kuala Lumpur Stock
Exchange and the various government ministries under instructions from the political
leadership failed to properly evaluate proposals which they had to consider in the
general investing public's interests. Vested interests ruled the day and many schemes
were approved which put that investment at risk.
Blatant share price tamping and other abuses took place on the Kuala Lumpur Stock
Exchange and in stock-broking firms, with share prices shooting sky-high entirely on the
basis of speculation and rumour, which the Malaysian authorities and politicians were
only too proud to point to as being the result of their new dynamic policies, far from
wanting to regulate or eliminate such unhealthy practices. They failed to see
the potentially more dangerous effects of such a situation. Malaysia had now become the
fastest growing investment centre in the region, slightly overshadowed perhaps by
Thailand and Indonesia which attracted a different kind of investor. Many made money in
this kind of market, and many borrowed heavily to speculate, notwithstanding that share
prices did not reflect their net tangible assets or earnings per share ratios or their real
In their hurry to show the world that Malaysia Boleh! Mahathir, Daim and their cronies
became careless. They failed to take heed of the warning signals. Uncaring and unfeeling
foreign investors do not reward carelessness and would be the first to take advantage of
the situation,but they did not seem to realize this, choosing instead to believe their own
The overall situation was rife for short term investment (or hot money)to make its move
to Malaysia, and the Malaysian authorities being more concerned about sustaining the
incredible growth levels of all sectors of the economy again failed to see this happening.
This hot money made a beeline for the stock market, tempted by the prospects of hefty
immediate and short term gains. Local investors including many of the Mahathir and
Daim's cronies were also tempted and thinking that nothing could go wrong, actually
borrowed huge sums of money from both local and foreign banks on the security of their
grossly inflated share holdings to buy up assets, projects and companies of doubtful
worth or potential. They had now really fallen into the trap of believing their own hype
(and that of their government of course).
All this while, both foreign hot fund managers and foreign currency speculators had been
watching the regional markets very carefully for the early signs of decline, with fast exit in
mind. They knew (as most locals did not as yet realize) that the absurd returns bordering
on the obscene from these stock markets were just not sustainable, and when private
and government debt in non-productive areas slowly began to creep up,increasingly
As one fund manager after another began to realize their profits and pullout their
investments out of Thailand and Indonesia, the stock markets in these countries rapidly
collapsed (in Thailand it had been preceded by the collapse of an over-built property
market). As these foreign fund managers converted their gains back to US Dollars from
the local currencies, they were prepared to take some losses on the exchange and the
values of the local currencies fell drastically (nothing compared,however, to the gains
which had already been realized by them).
Malaysia of course could not believe that it would be next. Its economy had better
fundamentals than Thailand or Indonesia or so it thought,believing in its own
propaganda. It was different and better managed. Its population was generally better
educated and more skilled and trained. It had a dynamic, uncorrupted and more stable
government (which apparently could do no wrong).
But the harsh reality is that it had pretty much made the same mistakes that the Thai and
Indonesian governments had, especially in allowing itself to fall under the vise-like grip of
crony capitalism, nepotistic practices and the attendant corruption that came with this -
the only difference being that in Malaysia the corruption was not so open or noticeable,
having been masked by the generally higher levels and slightly better spread of economic
development. Corruption was in fact rampant but only small fish got caught while the real
sharks got away -the reason being not just that they were protected by the government
but that they were the government and at all levels, departments and ministries that
Most of these cronies who had over-committed themselves were unable to respond
effectively or in any timely manner to the rapidly changing economic scenario and the
damage that foreign capital flight and foreign currency speculation had wrought. Neither
was any immediate assistance to be had from the government, which staggered from
one inappropriate and ineffective response to another. Mahathir's ill-conceived remarks
blaming the crisis thus caused on foreign currency speculators and hints of a Zionist plot
further angered foreign fund managers who caused further damage by liquidating their
shares and pulling out their funds - thus leading to successive slumps of the Kuala
Lumpur Stock Exchange and drop sin the value of the Malaysian ringgit each time he
opened his mouth.
Whether Mahathir's criticisms had any truth is not really at issue. His being right in this
matter did not undo the wrongs, perceived and actual,which his government was
responsible for. Failure to recognize the damage and accept some measure of
accountability, lack of transparency,generally inept and even inappropriate responses all
combined to doom any real effort to redress the critical situation.
The local investors were all left in the lurch, since they had not expected any such capital
flight or consequent attack on their currency,if at all these were really attacks or merely
speculators taking advantage of Malaysia's inherent weaknesses. Other markets have of
course also been attacked.
There were and still are of course powerful and invisible forces at work behind the
scenes who are pushing a globalist agenda, one likely to hold hostage the economies of
whole nations. Money to people like these is no different from any other commodity and
in fact the best of all commodities and they have or are in control of lots of it. They are
not concerned about the good that money can do, only how much more they can make,
even if in the process they ravage countries who are foolish enough to open up and
depend on them.
They move billions around the world with the mere push of a few computer buttons. But
blaming them for what they do best is not a solution,especially if we ourselves have
embraced the very economic system which they espouse. We have to play by their rules
and they are not going to accommodate us if we wish to change the rules of what is
essentially their game not ours. Can we blame them if we get whacked for not playing by
the rules? Complaining bitterly to the referees who are themselves part of the game is
not going to help us either but perhaps only earn usa red card and expulsion from the
For all his other faults, Mahathir may be right in this regard. But can this right reverse all
the wrongs which he himself and his cronies have committed or the effects of those
wrongs? At best it can serve as a diversionary tactic and have no effect other than to
earn further punishment for his people and country the majority of whom are not
even playing the game but watch on as hapless spectators.
Paul Krugman, a professor of economics at the Massachusetts Institute of Technology
had dared to suggest in an article written in Foreign Affairs of the Economist on the East
Asian miracle that the miracle was no miracle, nor a result of any special values, nor
could it last without measures to improve total factor productivity. However, as he himself
has since written, he did not mean that it would undergo the kind of spectacular collapse
of the past year or so.
In a December 29 Fortune article Seven Habits of Highly Defective Investors on the
financial market he says that foreign investors(represented by fund managers) are not
quite a bunch of Machiavellian speculators, but an extremely dangerous flock of sheep.
He said, ...you must have noticed that markets have been behaving pretty strangely of
late. As recently as June (1997) the miracle economies of Southeast Asia could do no
wrong--investors cheerfully put billions into local stock markets. By October those same
investors were in full flight;after all, everyone could see how corrupt and badly managed
those economies were.
This article conveyed his impression obtained from a meeting of money managers who
collectively control several hundred billion (US) dollars he attended.
As he said, Mainly I wanted to know why such smart men and women--and they must
be smart because if they aren't smart, why are they rich?--do such foolish things.
Here's what I learned: the seven habits that help produce the anything-but-efficient
markets that rule the world:
1. Think short term. A few people in that meeting tried to talk about the long term--say,
about what kind of earnings growth U.S. corporations might be able to achieve over the
next five years. This sort of thing was brushed aside as too academic. But wait: Any
economist will tell you that even a short-term investor should look at the long run. This
year's stock price depends on this year's earnings plus what people think the price will be
next year. But next year's price will depend on next year's earnings plus what people next
year expect the price to be the following year.... Today's price, then, should take into
account earnings prospect swell into the future. Try telling that to the practitioners.
2. Be greedy. Many of the people kept talking about how they expected a final melt-up
in prices before the big correction and how they planned to ride the market up for a while
longer. Well, maybe they were right,but if you really think stocks are overvalued, how
confident should you be about your ability to time the inevitable plunge? Trying to get
those extra few percent could be a very expensive proposition.
3. Believe in the greater fool. Several money managers argued that Asian markets have
been oversold, but that one shouldn't buy in until those markets start to turn around--just
as others argued that the U.S. market is overvalued, but they didn't plan to sell until the
market started to weaken. The obvious question was, If it becomes clear to you that
the market has turned around, won't it be clear to everyone else? Implicitly,they all
seemed to believe that the strategy was safe, because there is always someone else
dense enough not to notice until it really is too late.
4. Run with the herd. You might have expected that a group of investors would have been
interested to hear contrariness views from someone who suggested that the U.S. is on the
verge of serious inflationary problems,or that Japan is poised for a rapid economic
recovery, or that the European Monetary Union is going to fail -- which would have
offered an ice challenge to conventional wisdom. But no: The few timid contrarians were
ridiculed. The group apparently wanted conventional wisdom reinforced, not challenged.
5. Over generalize. I was amazed to hear the group condemn Japanese companies as
incompetent, atrociously managed, unable to focus on the bottom line. But surely it can't
be true of all Japanese companies; guys who managed to export even at 80 yen to the
dollar must have at least a few tricks up their sleeves. And wasn't it only a couple of
years ago that Japanese management techniques were the subject of hundreds
of adulatory books and articles? They were never really that good, but surely they are
better than their current reputation.
6. Be trendy. I came to the meeting expecting to hear a lot about the New Economic
Paradigm, which asserts that technology and globalization mean that all the old rules
have been repealed, that the inflation-free growth of the past six years will continue
indefinitely, that we are at the start of a 20-year boom, etc. That doctrine is basically
nonsense, of course--but anyway I quickly determined that it is, as they say in Buffy the
Vampire Slayer, so five minutes ago. All the rules have changed again: Now we stand
on the brink of a dreadful epoch of global deflation,and despite its previous track record
of engineering recoveries, there is nothing the Fed can do about it. You see, it's a new
7. Play with other people's money. If, as I said, the people at that meeting were very
smart, why did they act in ways that seem so foolish?Part of the answer, I suspect, is
that they are employees, not principals; they are trying to make money and careers for
themselves. In that position, it is hard to take a long view: In the long run, even if you
aren't dead, you probably won't be working in the same place. It is also difficult for
someone managing other people's money to take an independent line. To be wrong when
everyone else is wrong is not such a terrible thing: You may lose a bonus, but probably
not your job. On the other hand, to be wrong when everyone else is right... So
everyone focuses on the same short-term numbers, tries to ride the trends, and buys the
silly economic theory du jour.
Listening to all that money talking made me very nervous. After all,these people can
funnel money into a country's markets, then abruptly pull that money out--and create a
boom-bust cycle of pretty spectacular proportions. I don't think they can do it to the
U.S.--in Greenspan It rust--but I am not 100% sure.
One thing that I am sure of is that the Asian leaders who have been fulminating against
the evil machinations of speculators have it wrong.What I saw in that room was not a
predatory pack of speculative wolves:It was an extremely dangerous flock of financial
In this analysis therefore, this was not as much a Zionist plot as aheard-like divested or
flight of investment which realised extraordinary gain for foreign fund managers coupled
with a realization of extraordinary profit from the resulting currency conversions by
the so-called foreign currency speculators and left local investors holding onto shares
whose values had come way down to earth and local Malaysian Ringgit currency which
had greatly diminished in value compared to other foreign currencies such as the US
Dollar, Japanese Yen and the British Pound.
Even if a real conspiracy existed, it would not really matter too much one way or the
other. Those who live by the sword die by the sword.Malaysia had embraced an
economic system which does not suffer fools and crooks gladly and was made to pay
the price for its government's cancellations and misdeeds. Will Malaysians learn from
this debacle and avoid repeating the mistakes of their present leaders? Only
Malaysians themselves will be able to answer this as they prepare for elections in less
than 1 1/2 year's time (or even earlier or not at all depending on Mahathir's capacity to
shock which cannot be underestimated).
It has become clear to all Malaysians that the government is intent on saving a handful of
Mahathir and Daim cronies at the expense of the rest of the country. How do they expect
Malaysians to trust them any longer?
The bailout involving Mirzan Mahathir's shipping empire has been the biggest and most
controversial deal so far. PETRONAS, which reports directly to Mahathir, announced on
March 6, 1998 a complex deal under which it will purchase the state-affiliated Malaysian
International Shipping Corporation, which in turn will purchase Mirzan's Hong
Kong company, Pacific Basin Bulk Shipping, and part of his Kuala
Lumpur-based Konsortium Perkapalan, which does shipping and haulage.
By Mirzan's own admission the deal will wipe out some USD420 million in debts. What is
a young man like him - he's only 39 - doing with such extensive liabilities? By all accounts
he is not the only one, as all of the cronies (and some of his other siblings as well) find
themselves in the same predicament. Can or should the government save all of them? If it
does, it can only be at the expense of public funds. The Far Eastern Economic Review
reported that several cabinet members are alarmed by the transaction. I thought such
things could only happen in Indonesia or some African country, says an UMNO leader.
Mirzan, for his part, told reporters: I don't think it is a bailout. It's only a bailout if you
say so. Mirzan, of course, is only the Prime Minister's son if you say so.And yes, such
and stranger things do happen in Malaysia and may continue to happen if Mahathir and
his cabal continue to have it their way.
Other strange deals to which the market reacted adversely include a controversial one
involving Renong and the purchase by United Engineers,a subsidiary of Renong of an
additional stake in Renong itself. The Far Eastern Economic Review states that Though
Renong is controlled by tycoon Halim Saad, many believe he holds those shares as a
nominee for UMNO or its leaders -- which UMNO treasurer Daim denies. No
Malaysian believes his denials.
The deal was particularly controversial because UEM received a waiver from regulatory
bodies that, in effect, short changed Renong's minority shareholders. Insiders say Finance
Minister Anwar was out of the loop on this rescue, and perhaps on others too. So, who is
calling the shots on the bailouts? Whatever it is, Renong is not out of the woods yet and
is still in desperate need of a rescue plan, as are many other Malaysian corporations,
connected as well as non-connected to the political leadership.
Malaysians wait with bated breath to see who among the cronies will be rescued next
and whether public or government funds will be used. Even the Employees' Provident
Fund (EPF) coffers are said to have dried up in a futile bid to shore up the collapsing
stock market, when what the EPF should have done naturally in a falling and extremely
volatile market would be to sit it out and wait until the market has reached its lowest level
before buying in cheap. However, the EPF was reportedly acting under instructions from
the top and wasted billions of ringgit in this manner. One can only hazard guesses as to
which cronies' stocks they bought into and are now forced to hold on to and the extent of
the paper losses they now bear.
There is a lot more that can be said, but so much for the disease (for the time being),
now for the cure.
It is clear that the current riba or interest-based economic system has failed, either
because it is prone to abuse whether by locals or foreigners or because it carries within
itself the seeds of inequity and injustice.
Malaysia's whole political and economic system need a complete revamp.Perhaps now
is the time to really implement an Islamic system of economy with all its values. In spite
of its avowed Islamic aims, the present government has only indulged in tokenism when it
comes to Islam and will not implement anything really Islamic, always citing
Malaysia's multiracial society as an excuse as if Islam cannot take care of non-Muslim
There appears to be no other cure except replacement therapy. The cancer has spread
to wide and too deep to heal by normal means. Mahathir, Daim and their whole coterie of
cronies must go. This evil empire must be brought to an end. Malaysians do not have a
choice, even if GRR/PAS/DAP is the only alternative.
In a way, the economic crisis has given Malaysia a unique opportunity to restructure its
whole political, economic and social system toward one of greater accountability, no
corruption, trusteeship, no excesses or extravagance, more real social justice and not
just talk, a truly fearless and independent judiciary, professional and
efficient management, less hand-outs, better and more equitable distribution of wealth, a
truly civil society. Malaysia can still show how to do things the right way, the Reformasi
There can be no doubt. The writing is on the wall. The winds of change are blowing. A
new era is dawning. The forces of evil are being dispersed. A kinder and gentler
Malaysia is here for the good of all Malaysians.
REFORMASI IS THE WAY OUT OF THE MALAYSIAN DILEMMA.
GOD SAVE MALAYSIA.
Reformasi A New Era is Near