*This article was written without fear or favour, and it is up to us todigest individually the truth of the matter, especially for all Malaysians(irrespective of race, colour, creed or religion)..........thanks to AlanTan for sharing.*
NB: It was written by a foreign writer and addressed to Dr Mahathir. Be free to share it with all your friends and relatives.
The highly respected Tun,
China is coming up, India is coming up, Vietnam is coming up and now evenRussia is on the rise. In this flat world that is all wired up andregardless whether we are Malaysian Malay, Chinese or Indian, and ifMalaysia does not progress, all of us would become history of this country!Without the Malay, Chinese could not do well in the country and without theChinese, Malay would not do well. Both have to work together to bring upMalaysia and mitigate the ascute impact that is being brought about by theglobalisation. For me, a true leader is someone who has the foresight thatnot only focus on one particular group in the country but take care of thefuture of everyone. A good leader is someone who know what is the biggestthreat the country is facing and direct the people to fight off the threat.A leader is also someone who is impartial that has the ability to promoteharmony in the country for a long period of time.
UMNO is a political looser that leads the country to nowhere. They do notunderstand what is going on the outside world. They have no clue whereMalaysia will be in the next 30 years. With the 3 new superpowers, i.eIndian, China and Russia standing tall and high together with USA and theEurope Union, they do not know what kind of world it would be and howMalaysia is going to compete and share the ever smaller slice of cake of theworld economy. They only know how to get the Malays to fight with otherNon-Malay on tiny issues within Malaysia, while the two races know jollywell that the issues they are fighting are trivial and is totallyself-satisfying. UMNO does not give a damn to how the poor Malay is going tolive in the future and they do not care about the real benefits of the poorMalays. They only want the votes from them. The NEP is a good evidence onhow they benefit the cronies, instead of the poor Malay. Despite all theirdespicable acts they are still in the power.
The highly respected Tun,
As you are aware, the Malays control the rights to all the lands and allother natural resources in this country. They control all governmentinstitutions, GLC and State owned companies. The Malays dominate thelawmaking process in Malaysia; The Malays control the decision makingprocess in formulating the economy policies. The Malays own the largestnational assets and the Malays are given shares in the public listedcompanies for free. The Malays have also been given all kind of prioritieswhen it comes to buying properties, awarding of public contracts, tertiaryeducation opportunities, awarding of scholarships and even getting a job ingovernment departments. With all these privileges and rights enjoyed by theMalays, you are saying nothing has been done enough to help the Malays tocatch up with other races, mainly the Chinese. Then what else shouldMalaysia do to satisfy the Malays? Did the Chinese seize or rob anythingaway from the Malays or all their wealth was a result of their hard work? Ifit is all due to their hard work, why do you say it is unfair? I don't quiteget your point here.
May I humbly ask you what do you expect the Chinese to do if your so-calledNEP did not achieve the desired result? Would the Malays be happy if theethnic Chinese in this country do any of the followings:
- surrender their assets and hard earned money to the Malaysunconditionally;
- not to engage in any business activities;
- not to score As in all sort of examinations;
- not to make money that is more than the Malays are earning;
- not to advance to higher education; or
- renounce their citizenships and go back to China or migrate to some othercountries?
I am a foreigner but I am surprised that your intention is to divide yourown country. I think you are mainly targeting the Chinese. Frankly, tell us,what do you expect the Chinese to do in order to achieve what is so called"equality" meant by you?
Tun, after all these criticism you have against the present government, Ifeel that you are starting to loose your rationality on your arguments. Youhave run out of good reasons to convince us. I guess it could be due to youraccumulating jealousy of Mr Lee Kuan Yew, your former counterpart inSingapore. But reality is always hard to accept. No matter how, you have toaccept the fact that he is regarded the Father of Singapore but you are notregarded the Father of Malaysia; you have to accept the fact that Mr Lee isable to influence the government of Singapore until he the day he dies butyou have not been able to influence the government from the moment youstepped down as PM. You must also accept the fact that he is still verypopular on the world stage and a leader respected by many but you are notquite. Because of these jealousies, you are starting to accumulateimbalances in yourself that lead you to embark on a series of action toattack your successors. It is very obvious that you are not happy when yoursuccessors are more popular than you. Is there any good of doing that? Whatis your intention? Can't you take it easy? During your time, you criticisedmost of the developed countries especially the Western Countries out ofjealousy and after stepping down as PM you criticise every single soulremained in the cabinet for not listening to you. When will you ever stopcriticising any people? Can't you respect the decision of others?
Back to your recent blog, is there anything wrong with Chinese in thiscountry? Did they seize or rob the money away from the Malays? Did they havethe ability to come out with any policies to marginalise the Malays? Didthey dominate the lawmaking process of this country? Did they formulate theeconomy policies in this country? Did they control the governmentdepartments in this country? Did they control the state owned companies andGLC in this country? Did they control the country's largest oil companiesand banks? You know the answer right? Malays are the one who dominate thethe lawmaking process of this country; Malays are the one that formulate theeconomy policies in this country that favours the Malays. Malays are theones that control the government departments, state owned companies and GLC.Malays are the one the control the funds in this country. Malays are alsothe ones that control the largest oil companies and banking industry in thiscountry. With all these rights enjoyed by the Malays, what else do you wantthe Chinese to do? Surrender their houses and savings and their wealth thatthey earned with their hard work to the Malays, for no reason? or ask allthe Chinese to renounce their citizenship and go back to China? Have youever thought of after 30 years of implementing NEP, why it does not achievethe desired result? Don't forget under the NEP there are a series ofpolicies that favors the Malays. The obvious ones would be the distributionsof APs and awarding of contracts. If with all these policies, it still dosenot give the Malay what they want, what else do you want the Chinese to do?Is the Chinese to be blamed because they are too hard working? Or the Malaysto be blamed because they do not treasure the opportunities given? You knowvery well the NEP has been misused and it only benefits the cronies. So ifyou have designed NEP to only benefits the cronies, please don't say it isthe problem of Chinese that NEP does not achieve its result. It has nothingto do with the Chinese but NEP and the Malay themselves.
This is a globalised world, Chinese and Malays should not be fightingagainst each other because Malaysia is competing with other countries. Chinaused to be backward and lagging behind Malaysia but now they have caught upand have even surpassed Malaysia. Can we ask them to slow down theirdevelopment? If they refuse to listen can we make a complaint to the UnitedNation that China is developing too fast and this is very unfair toMalaysia, which adapts a more a passive approach? Who give you the right toprevent others from progressing? Who you think you are? This is a flat world(Obviously Tun did not read the book named "The World is Flat"). Don't be sonarrow minded to only focus on the Chinese or Malay in Malaysia. We shouldnow look at the world as a flat world. If Malaysia does not progress, nomatter we are Malay or Chinese, we would be extinct one day!
Have a God-blessed day.
The Asian Financial Crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown (financial contagion).
The crisis started in Thailand with the financial collapse of the Thai baht caused by the decision of the Thai government to float the baht, cutting its peg to the USD, after exhaustive efforts to support it in the face of a severe financial overextension that was in part real estate driven. At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and other asset prices, and a precipitous rise in private debt.[1]
Though there has been general agreement on the existence of a crisis and its consequences, what is less clear is the causes of the crisis, as well as its scope and resolution. Indonesia, South Korea and Thailand were the countries most affected by the crisis. Hong Kong, Malaysia, Laos and the Philippines were also hurt by the slump. The People's Republic of China, India, Taiwan, Singapore, Brunei and Vietnam were less affected, although all suffered from a loss of demand and confidence throughout the region.
Foreign debt-to-GDP ratios rose from 100% to 167% in the four large ASEAN economies in 1993-96, then shot up beyond 180% during the worst of the crisis. In Korea, the ratios rose from 13-21% and then as high as 40%, while the other Northern NICs (Newly Industrialized Countries) fared much better. Only in Thailand and Korea did debt service-to-exports ratios rise. [2]
Although most of the governments of Asia had seemingly sound fiscal policies, the International Monetary Fund (IMF) stepped in to initiate a $40 billion program to stabilize the currencies of South Korea, Thailand, and Indonesia, economies particularly hard hit by the crisis. The efforts to stem a global economic crisis did little to stabilize the domestic situation in Indonesia, however. After 30 years in power, President Suharto was forced to step down in May 1998 in the wake of widespread rioting that followed sharp price increases caused by a drastic devaluation of the rupiah. The effects of the crisis lingered through 1998. In the Philippines growth dropped to virtually zero in 1998. Only Singapore and Taiwan proved relatively insulated from the shock, but both suffered serious hits in passing, the former more so due to its size and geographical location between Malaysia and Indonesia. By 1999, however, analysts saw signs that the economies of Asia were beginning to recover.[3]
History
Until 1997, Asia attracted almost half of the total capital inflow from developing countries. The economies of Southeast Asia in particular maintained high interest rates attractive to foreign investors looking for a high rate of return. As a result the region's economies received a large inflow of money and experienced a dramatic run-up in asset prices. At the same time, the regional economies of Thailand, Malaysia, Indonesia, Singapore, and South Korea experienced high growth rates, 8-12% GDP, in the late 1980s and early 1990s. This achievement was widely acclaimed by financial institutions including the IMF and World Bank, and was known as part of the "Asian economic miracle".
In 1994, noted economist Paul Krugman published an article attacking the idea of an "Asian economic miracle".[4] He argued that East Asia's economic growth had historically been the result of capital investment, leading to growth in productivity. However, total factor productivity had increased only marginally or not at all. Krugman argued that only growth in total factor productivity, and not capital investment, could lead to long-term prosperity. Krugman's views would be seen by many as prescient after the financial crisis had become full-blown[neutrality disputed], though he himself stated that he had not predicted the crisis nor foreseen its depth.
The causes of the debacle are many and disputed. Thailand's economy developed into a bubble fueled by "hot money". More and more was required as the size of the bubble grew. The same type of situation happened in Malaysia, and Indonesia, which had the added complication of what was called "crony capitalism".[5] The short-term capital flow was expensive and often highly conditioned for quick profit. Development money went in a largely uncontrolled manner to certain people only, not particularly the best suited or most efficient, but those closest to the centers of power.[6]
At the time of the mid-1990s, Thailand, Indonesia and South Korea had large private current account deficits and the maintenance of fixed exchange rates encouraged external borrowing and led to excessive exposure to foreign exchange risk in both the financial and corporate sectors. In the mid-1990s, two factors began to change their economic environment. As the U.S. economy recovered from a recession in the early 1990s, the U.S. Federal Reserve Bank under Alan Greenspan began to raise U.S. interest rates to head off inflation. This made the U.S. a more attractive investment destination relative to Southeast Asia, which had attracted hot money flows through high short-term interest rates, and raised the value of the U.S. dollar, to which many Southeast Asian nations' currencies were pegged, thus making their exports less competitive. At the same time, Southeast Asia's export growth slowed dramatically in the spring of 1996, deteriorating their current account position.
Some economists have advanced the impact of China on the real economy as a contributing factor to ASEAN nations' export growth slowdown, though these economists maintain the main cause of the crises was excessive real estate speculation.[7] China had begun to compete effectively with other Asian exporters particularly in the 1990s after the implementation of a number of export-oriented reforms. Most importantly, the Thai and Indonesian currencies were closely tied to the dollar, which was appreciating in the 1990s. Western importers sought cheaper manufacturers and found them, indeed, in China whose currency was depreciated relative to the dollar. Other economists dispute this claim noting that both ASEAN and China experienced simultaneous rapid export growth in the early 1990s.[8]
Many economists believe that the Asian crisis was created not by market psychology or technology, but by policies that distorted incentives within the lender-borrower relationship. The resulting large quantities of credit that became available generated a highly-leveraged economic climate, and pushed up asset prices to an unsustainable level.[9] These asset prices eventually began to collapse, causing individuals and companies to default on debt obligations. The resulting panic among lenders led to a large withdrawal of credit from the crisis countries, causing a credit crunch and further bankruptcies. In addition, as investors attempted to withdraw their money, the exchange market was flooded with the currencies of the crisis countries, putting depreciative pressure on their exchange rates. In order to prevent a collapse of the currency values, these countries' governments were forced to raise domestic interest rates to exceedingly high levels (to help diminish the flight of capital by making lending to that country relatively more attractive to investors) and to intervene in the exchange market, buying up any excess domestic currency at the fixed exchange rate with foreign reserves. Neither of these policy responses could be sustained for long. Very high interest rates, which can be extremely damaging to an economy that is relatively healthy, wreaked further havoc on economies in an already fragile state, while the central banks were hemorrhaging foreign reserves, of which they had finite amounts. When it became clear that the tide of capital fleeing these countries was not to be stopped, the authorities ceased defending their fixed exchange rates and allowed their currencies to float. The resulting depreciated value of those currencies meant that foreign currency-denominated liabilities grew substantially in domestic currency terms, causing more bankruptcies and further deepening the crisis.
Other economists, including Joseph Stiglitz and Jeffrey Sachs, have downplayed the role of the real economy in the crisis compared to the financial markets due to the speed of the crisis. The rapidity with which the crisis happened has prompted Sachs and others to compare it to a classic bank run prompted by a sudden risk shock. Sachs pointed to strict monetary and contractory fiscal policies implemented by the governments on the advice of the IMF in the wake of the crisis, while Frederic Mishkin points to the role of asymmetric information in the financial markets that led to a "herd mentality" among investors that magnified a relatively small risk in the real economy. The crisis had thus attracted interest from behavioral economists interested in market psychology. Another possible cause of the sudden risk shock may also be attributable to the handover of Hong Kong sovereignty on 1 July 1997. During the 1990s, hot money flew into the Southeast Asia region but investors were often ignorant of the actual fundamentals or risk profiles of the respective economies. The uncertainty regarding the future of Hong Kong led investors to shrink even further away from Asia, exacerbating economic conditions in the area (subsequently leading to the devaluation of the Thai baht on 2 July 1997).[10]
The foreign ministers of the 10 ASEAN countries believed that the well co-ordinated manipulation of currencies was a deliberate attempt to destabilize the ASEAN economies. Former Malaysian Prime Minister Mahathir Mohamad accused George Soros of ruining Malaysia's economy with "massive currency speculation." (Soros appeared to have had his bets in against the Asian currency devaluations, incurring a loss when the crisis hit.[citation needed]) At the 30th ASEAN Ministerial Meeting held in Subang Jaya, Malaysia, they issued a joint declaration on 25 July 1997 expressing serious concern and called for further intensification of ASEAN's cooperation to safeguard and promote ASEAN's interest in this regard.[11] Coincidentally, on that same day, the central bankers of most of the affected countries were at the EMEAP (Executive Meeting of East Asia Pacific) meeting in Shanghai, and they failed to make the 'New Arrangement to Borrow' operational. A year earlier, the finance ministers of these same countries had attended the 3rd APEC finance ministers meeting in Kyoto, Japan on 17 March 1996, and according to that joint declaration, they had been unable to double the amounts available under the 'General Agreement to Borrow' and the 'Emergency Finance Mechanism'. As such, the crisis could be seen as the failure to adequately build capacity in time to prevent Currency Manipulation. This hypothesis enjoyed little support among economists, however, who argue that no single investor could have had enough impact on the market to successfully manipulate the currencies' values. In addition, the level of organization necessary to coordinate a massive exodus of investors from Southeast Asian currencies in order to manipulate their values rendered this possibility remote.
Malaysia
Further information: Economy of Malaysia
Before the crisis, Malaysia had a large current account deficit of 5% of its GDP. At the time, Malaysia was a popular investment destination, and this was reflected in KLSE activity which was regularly the most active stock exchange in the world (with turnover exceeding even markets with far higher capitalization like the NYSE). Expectations at the time were that the growth rate would continue, propelling Malaysia to developed status by 2020, a government policy articulated in Wawasan 2020. At the start of 1997, the KLSE Composite index was above 1,200, the ringgit was trading above 2.50 to the dollar, and the overnight rate was below 7%.
In July 1997, within days of the Thai baht devaluation, the Malaysian ringgit was "attacked" by speculators. The overnight rate jumped from under 8% to over 40%. This led to rating downgrades and a general sell off on the stock and currency markets. By end of 1997, ratings had fallen many notches from investment grade to junk, the KLSE had lost more than 50% from above 1,200 to under 600, and the ringgit had lost 50% of its value, falling from above 2.50 to under 3.80 to the dollar.
In 1998, the output of the real economy declined plunging the country into its first recession for many years. The construction sector contracted 23.5%, manufacturing shrunk 9% and the agriculture sector 5.9%. Overall, the country's gross domestic product plunged 6.2% in 1998. During that year, the ringgit plunged below 4.7 and the KLSE fell below 270 points. In September that year, various defensive measures were announced in order to overcome the crisis. The principal measure taken were to move the ringgit from a free float to a fixed exchange rate regime. Bank Negara fixed the ringgit at 3.8 to the dollar. Capital controls were imposed while aid offered from the IMF was refused. Various task force agencies were formed. The Corporate Debt Restructuring Committee dealt with corporate loans. Danaharta discounted and bought bad loans from banks to facilitate orderly asset realization. Danamodal recapitalized banks.
Growth then settled at a slower but more sustainable pace. The massive current account deficit became a fairly substantial surplus. Banks were better capitalized and NPLs were realised in an orderly way. Small banks were bought out by strong ones. A large number of PLCs were unable to regulate their financial affairs and were delisted. Compared to the 1997 current account, by 2005, Malaysia was estimated to have a US$14.06 billion surplus.[21] Asset values however, have not returned to their pre-crisis highs. In 2005 the last of the crisis measures were removed as the ringgit was taken off the fixed exchange system. But unlike the pre-crisis days, it did not appear to be a free float, but a managed float, like the Singapore dollar.
