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Gold/Mining/Energy : Lundin Oil (LOILY, LOILB Sweden) -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (1117)	5/31/1999 10:08:00 PM
From: Tomas	Respond to of 2742

"Inflows of foreign direct investment into Malaysia have accelerated sharply this year" MALAYSIA: Capital curbs 'paying off' Financial Times, May 31 By Peter Montagnon, Asia Editor, in London Inflows of foreign direct investment into Malaysia have accelerated sharply this year, providing further evidence of the benign impact of capital controls introduced last September, Daim Zainuddin, finance minister said in an interview. In the first four months of the year Malaysia attracted M$8bn (£1.3bn at official rates) of foreign direct investment compared with just M$9bn for the whole of last year, he said. The normally retiring Mr Daim, a long-standing associate of Mahathir Mohamad, prime minister, and the main architect of the country's economic policy, said the capital controls had induced many benefits for the economy, including stabilisation of the currency and the restoration of confidence. "In the case of Malaysia, I just don't see the cons," he said. Malaysia was now receiving inquiries from other countries, including some in eastern Europe, about its experience. "When we introduced selective capital controls, we had no intention of strengthening the ringgit," he said. "Our idea was to protect our economy, and give us the opportunity to reduce interest rates." Since the controls were imposed foreign reserves had increased by nearly US$10bn to $29.7bn (£18.5bn) and the economy had started to grow again. But financial market fears of an artificial surge in bank credit never materialised and Malaysia had not intended to shy away from financial restructuring, a process that was now well under way. The task of taking bad loans out of the banking system would be completed next month, six months ahead of schedule and recapitalisation of the banks would be completed this year. The total cost of the bank bail-out was now estimated at M$31bn, he said. Since Malaysia had replaced restrictions on the remittance of short-term portfolio investment profits with an exit tax, there were "hardly any more capital controls,". But there was "no reason" to re-float the ringgit which was fixed at M$3.80 to the dollar at the time of the capital controls. "The market expects us to revalue our currency, but we must not respond just because the market expects us to. It must be based on fundamentals," he said. Mr Daim was in London to promote Malaysia's new $1bn international bond issue. Although cut from an originally planned $2bn because of concerns about US interest rates, the issue had been three times over-subscribed. The government had no further plans to borrow in international bond markets. It was keen to raise further credit from foreign banks with branches in Malaysia, but the central bank would decide whether to go ahead.