[asia-apec 615] Interview with Mahathir about recent currency policy (part 3 of 3)

[PAN Asia Pacific]

Interview (cont'd)

Q: Despite the evidence we see today, the IMF and other international agencies are not very keen 
to come in and stabilise the economy. Despite the fact that that is is actually their mandate. Can 
Datuk Seri enlighthen us  what is the rationale that they are not helping us through. 

Dr M: They see in our trouble a means to force us to accept certain  regimes. They want us to have 
reforms, meaning to say we should open our market wide for foreign companies to come in and do 
business without any conditions whatsoever. Their help is always based on that... we will give you 
the money provided you open up the economy. And when we open up our economy, we will of 
course lose control of our economy, all our companies, all our banks and all our industries will  
belong to foreigners. 

In Malaysia, in particular, we are in the process of restructuring the economy, we can't do that 
because they will object to any conditions being imposed upon them. So the IMF should in fact be 
helping developing countries which are in financial trouble but it wants to use the financial trouble 
in other countries to enable the giant companies from the rich countries to come in and take over 
the economy. That seems to me to be their objectives rather than helping. Of course they say 
reforms, but reforms (to) them means something beneficial to the developed countries.

In fact among the speculators they actually say openly," we want to see blood. In others words we 
want to see killings. You know these companies must be killed, that is a measure of how serious 
you are about reforms. I can't understand that because we have seen blood enough. In some 
countries, millions of workers are unemployed now and they have no food, no medicine, no milk 
for their children and all thess people can think of is that this is the price we have to pay for the 
reforms and reforms are good for you. 

Q: Datuk Seri, in this regard do you see that this move taken by us can put a spanner in the works 
of the speculators? 

Dr M: We think so. That is the purpose in fact. We have to take the speculators out of the currency 
trade involving the ringgit. Because of course currencies need to be changed in order to trade to 
finance trade. That we can do without the speculators. We can do even without the hedge funds. 

Q: Datuk Seri, do you think other developing economies will come forward and do the same thing 
we have done here? 

Dr M: Well there are signs that people are losing faith in the operations of the free market. That's 
why Hong Kong went in in order to curb the speculators. Now Taiwan has given warning to 
(financial speculator George Soros) not to come to Taiwan and China has refused to allow its 
currency to be freely convertable. Now Russia has second thoughts, they may even go back to 
communism. Of course we have seen what Chile  and Slovenia have done. People can realy find 
that when the system is abused and they suffer,then they are prepared to change. But some 
countries apparenly benefit from the abuses. 
Q: There is talk that following the implementation of these measures, deposits, people's savings in 
banks will be frozen. Is there any truth in this? 

Dr M: There is no reason. There is no reason. The internal economy is  not touched in this 
matter.The domestic economy will become stronger, traders can trade without being disturbed by 
the fall in the value of the ringgit and share prices. The domestic financial system will become 
stronger and there is no reason for us to freeze fixed deposits for  instance. The money in the bank 
is safe and will not be touched. 

Q: Our people going for the Umrah in Mecca, usually bring along our  ringgit and then go and 
exchange it there but lately our Malaysian money is not popular in Mecca or in Medina so if we 
want to perform the haj, they get the ringgit and buy US dollars or Riyal here and they will have no  
problem in getting the money. 

Dr M: There is no problem of accommodation and surely the money they wish to bring will not be 
a big amount exceeding their needs but if  they really need a big amount, we will arrange for them 
to change ringgit into riyal or pound or any currency they preferred. We can give them. 

Q: Is this governed by the regulation that it should not exceed RM10,000? 

Dr M: The maximum is RM10,000 but if they have to spend more than that and if they provide the 
proof there is no reason why we should not consider. Hence we do not at all have any plans to 
restrict such trips. It has never crossed the government's mind. 

We want our economy to expand and progress and to impose controls which would not benefit the 
people... surely the government would not want this. It only wants our country and the economy to 
recover and we are confident that with the various measures in place and that to be further taken, 
we will ensure that the economy recovered. 

Previously we were unable to take the measures. For each time we want our economy to recover, 
they will hit at our ringgit and shares so that we become poorer.... so poor that we will have to seek 
IMF help and then we will lose our freedom. 

Q: From Jan 1 till June, our economy contracted by 6.8 per cent, how do we explain this to the 
people as many are not clear as to what this contraction means. 

Dr M: If we want to take into account trading and economic activities, we can create wealth 
through this. But if there is less trade, fewer economic activities, there will be less money. This is 
what is happening. The question is why is it happening? For instance we are producers of 
microchips for computers but the demand for this had fallen because the whole of East Asia had 
become poor, unable to buy computers and so on. In Europe also demand had fallen and America 
is unable to sellcomputers to developing countries as they make computers but not all of them are 
sold in America which has a lot of money and they need to  export and their own markets (East 
Asia) had been destroyed. 
For instance we are a market for Boeing aircraft but now we no longer buy the aircraft as tourism 
has fallen and the need for such planes had fallen and so we are not buying and the US economy 
will decline and when the economy declines the market for our goods also becomes smaller. 

The Japanese market had also declined and so demand for our usual  exports to them had fallen 
and this had resulted in our trading and economic ectivities contracting by 6.8 per cent and not 
from January to June but in the second quarter (three months) from April to June. From January to 
March (first quarter, first three months) it contracted by 1.8 per cent. 

Q: Do you expect measures being taken will lead to a lower contraction of the economy and 
probably in six months result in a slight economic growth, or at least some growth? 

Dr M: I'm confident there would be some growth, because now we are  focusing not on export 
activites but on domestic activities and that is why the government will spur infrastructure projects 
and the construction industry, which means we will spend a lot of money. The construction 
industry will generate activities in 140 other related industries such as creation of jobs, demand for 
building materials and if people have disposable income they will spend and all these will mean 
economic activities. But we have to remember that if we have money but do not spend, or do not 
save in banks but keep it at home, the money will be meaningless to the economy. 

But if the money is used 10 times daily, it will have the multiplier effect and everytime it is used, 
there will be people who will have money and the people with money will in turn spend it and 
make profit and the progit  will generate the economy. So in this way we can develop our economy 
and that is why we would like to see, for example, more houses being built and bought and we find 
that the market for low-cost housing is still very good, so also medium-cost houses and if traders 
make profit, even luxury houses can be sold. We like to see our economy revived in this way. 

Q: Datuk Seri, do we have any changes to our investment policy? 

Dr M: No changes to our investment policy, they will still have the same treatment, privileges, tax-
free incentives that we normally give. They will have all those and at the same time they can bring 
in money and they can take out money what is theirs, if they make a profit. Yes, they can take out 
their profit, and in order to make a profit they have to produce something which they sell, and we'll 
benefit from their activity of selling especially if they export, if say they export 10 million dollars of 
goods, they will bring back that 10 million dollars, their profit maybe one million dollars. That one 
million dollars, take it and repatriate it to their country we don't mind that, but they have to earn the 
profit first before they can repatriate, they can't simply take the money here and convert into 
foreign exchange and then send out. 

Q: You have said that the government will spend huge sums of money for infrastructure projects, 
who will build these projects, will the government reassume the role of implementors or will the 
government continue to do so via privatization? 

Dr M: I always believe that the government is less efficient. That's why we go for privatization and 
it doesn't matter if the money is from the government or the private sector, what is important is 
money changing  hands. When there are economic activities, money will change hands, whether 
from the government to the private sector or between the private sector itself or to the workers, 
suppliers, the transport industry people, all these will happen if we spend money. Government or 
private sector is not the problem, what is important is that money is moved around and not just 
being kept idle. 

I'm confident that if the value of their shares once again is commensurate  with the nett assets and 
the value of our currency is again stable, the companies will recover, if not fully recover, at least 
their NPLs will be reduced and they can borrow once more. If they can borrow, they can carry out 
economic activities and make profits and profitable activities will enable them to repay their loans 
and in this way, they can be revived.

Q: Datuk Seri, there must be a sense of urgency all-round in reviving the economy? 

Dr M: Yes, I hope that everybody will understand that time really means  money, everybody must 
work harder than usual, in the government I expect the people to work day and night to help the 
economy to recover. Ministers have been instructed that they must work day and night, they must 
go and see what's happening on the ground, not enough by just giving direction, go back and sleep, 
no way they can work that way now and government officers have been told, everybody has been 
told that you must work extra hard, because we are facing a very difficult economic situation and 
the only way we can overcome that is really to work very hard and not allow your kind of easy 
going way to interfere with the economic recovery in this country. 
                    --Bernama