Date: Sun, 13 Sep 1998 05:21:47 +0800 To: Saudara Datuk Seri Anwar Ibrahim

From: J. Subject: The Malaysian Dilemma


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 Reformasi.

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 religious disharmony.

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 strategy?

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 stalls.

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 hidden agenda?

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 continued funding.

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 realized.

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 Minister's Department.

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 projects.

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 viable.

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 coalition).

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 development.

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 induced.

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 whole book.

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 to them.

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 complacency.

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 values.

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 hype.

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 became jittery.

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 mattered.

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 game.

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, 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 new economy.

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 sheep.

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 interests.

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 way.

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.




J. Tugauw

Reformasi A New Era is Near