Sonny,NEWS ITEM :Indonesia's Suharto AND PM Mahathir seem to be stumbling blocks to reform.It appers mahathir's son tried to commit
suicide because of mounting debt:
TA
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BUSINESS 1/9/98
In Malaysia, A Reticent Mahathir Steers Away From Controversy
By James Hookway
Staff Reporter
KUALA LUMPUR -(Dow Jones)- Malaysian Prime Minister Mahathir Mohamad has
made an uncharacteristically reticent start to 1998, noticeably toning down
his rhetoric as his country's currency continues to crumble.
Analysts say the change could reflect a growing realization by Mahathir and
his government that their current problems haven't just blown in from across
the water like the smoke from Indonesian bush fires which shrouded Kuala
Lumpur in thick haze last year.
In a live interview on daytime television Friday, Mahathir conceded that
Malaysia's current economic malaise will be a lot more difficult to reverse
than the recession which hit the country in the mid-1980s.
Although he still points the finger at "foreign parties" and continues to
warn of "economic colonialization" if Malaysia is forced to seek
International Monetary Fund aid, he steered clear of the colorful accusations
which livened up the World Bank conference in Hong Kong last year.
Back then, he referred to hedge fund manager George Soros as a "moron" for
allegedly selling the ringgit down. His nemesis quickly responded, labeling
Mahathir as a "menace to his country."
But on Friday, Mahathir was content to advise housewives to make their own
barbecue sauce instead of buying expensive imported brands.
"He's moved down a few notches on the emotive scale," said Desmond Supple,
head of Asian currencies at BZW Asia. "I just hope the mistakes of last year
have set in and he realizes that a head of state can't say these things about
the currency markets."
Also on Friday, Mahathir dismissed market rumors that one of his sons had
attempted suicide because of mounting debt problems.
Speaking after leaving a meeting of the ruling political party, the United
Malays National Organization, Mahathir scoffed at the rumors as groundless.
"It's not true," he said. "Why do people believe such things?"
Unsubstantiated rumors had been circulating in the stock market the past
few days that one of the premier's two sons had attempted to end his life. It
was the first time Mahathir had spoken about the market talk.
He also dismissed concerns about the health of the banking sector. He said
he had spoken with central bank governor Ahmad Mohd Don and had been told
there weren't any problems with the sector.
The Malaysian ringgit was relatively stable Friday after a week in which it
lost 17% of its value. It stood at 4.4360 to the dollar late Friday, up from
4.6800 late Thursday. Since the Asian currency crisis erupted in Thailand six
months ago, the ringgit has lost 45% of its value.
Signs of a change in attitude have been visible for some time. In December,
Mahathir's deputy, Finance Minister Anwar Ibrahim, unveiled a program to
prepare Malaysia for a hard landing. Cutting 1998 growth forecasts to 4%-5%
instead of the customary 8%, Anwar also announced a sweeping 18% cut in
government spending and curbed bank lending to unproductive projects.
SocGen-Crosby Securities Ltd. welcomed the new package as a virtual IMF
program. "The early December statement by Anwar that growth forecasts for
1998 have been slashed from a robust 7% to between 4% and 5% is of seminal
importance as it represents a fundamental policy shift," the securities house
said in its latest quarterly report.
"Official thinking is now to accept the reality of a slowdown and to try
and minimize the problems rather than the previous policy of artificially
promoting growth at the expense of economic stability," it said.
Mahathir bolstered the austerity drive at a meeting of Asian leaders in
Kuala Lumpur in December. Warning that it could take Southeast Asian
countries up to 30 years to recover from the economic quake, he expounded on
the need to "amputate the gangrenous legs of the economy."
Diplomatic sources have suggested Mahathir was being pressured to moderate
his attacks by his partners in the Association of Southeast Asian Nations -
many of which have seen their own currencies hit in the market reaction to
some of Mahathir's statements.
A carefully woven fabric of political and commercial influences, Malaysia's
highly-leveraged economy is facing severe strains in the fallout of the
regional currency crisis.
With inefficient but well-connected businesses in danger of going to the
wall, the country's economic planners face a credibility test - bail them out
and leave the current political system intact, or let them go under and
redefine the complex alliances which shape Malaysian politics.
In downgrading Malaysia's long-term foreign currency debt in December,
Standard & Poor's left little doubt about the importance of the issue.
"Inadequate disclosure standards and linkages between the political and
business elites impedes timely recognition of problems in the financial and
corporate sectors, and the implementation of market-based solutions to
resolve them," S&P said. |
