Mohan,
<<I am not sure how recent controls in Malaysia affected you personally.>>
As I was not in the local stock market and live on a U.S.D. based income flow it really affected me little except to fix the exchange rate, which in some respects, is good (better forecast of needs). I did have bank accounts frozen here for a few days, because as usual, there was no planning for the actual logistics of the capital controls and the central bank didn't know what the new rules were. So they improvised as they went along. Again, except for increasing some anxiety, even this had little affect on me as the authorities are so inept they forgot to disallow my ATM card <G>. I had a couple of certificates here for cash reserves that I have since started taking down, simply "consuming" the money by not importing operational expenses and using those funds instead. They will be wound down by the early part of next year at which point I will be "unexposed" in the sense of local holdings of any kind. Except for local living expenses I have virtually no requirements for cash here in the near future.
<<I think capital controls is perhaps the wisest thing he has done in the recent past. What are your thoughts? >>
Perhaps wise in the sense of self preservation. I think he had to do it to get breathing room for his buddies from whence his power derives. They needed cash to keep their inept businesses afloat, which are now receiving another shot in the arm from immense government capital spending projects and new bank loans made in response to pressure from the government to loan more money. All this has fueled a thinly (and locally) traded sucker's rally in the stock market. In this sense they have mortgaged the future. There has been a virtual dry up of off-shore investment flows here due to the controls and the political hijinx. And you can only build so many buildings and get so many loans from Japan. So my question is how long will Mahatir stay this course and what is his plan of a return to a market based economy? And what happens when the money runs out? Of course I guess he could always go the way of Sadam and Kahdaffi and continue the retreat into insularity and self delusion. I must say that I have grown very cynical about his motives. Further I have grown an intense personal distaste for him and all he represents. And I fear that the recent policies and resultant events are only increasing the velocity of, and human toll of, the fall when and if it comes.
Another, less critical view, would be that it is too early to tell whether the capital controls he so hastily put in, are good or bad, for the Malaysian economy ie. people.
Best,
Stitch
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