by Former PM Tun Dr. Mahathir Mohamad
1. Sebelum adanya Malaya dan Malaysia, Semenanjung ini dikenali sebagai Tanah Melayu.
2. Hanya berkata ini akan sebabkan kita dituduh bersifat perkauman.
3. Untuk terangkan berkenaan asal-usul kontrak sosial Malaysia saya terpaksa imbas semula sejarah.
4. Melalui perjanjian-perjanjian yang ditandatangani Raja-Raja Melayu Semenanjung, British telah mendapat hak untuk menakluk Negeri-negeri Melayu.Perjanjian-perjanjian ini mengakui dan mengesahkan Negeri-negeri ini sebagai Negeri-Negeri Melayu. Tidak ada sesiapa pun yang membantah. Orang Asli juga menerima keadaan ini dengan penerimaan oleh mereka pemerintahan Raja-Raja Melayu.
5. Pada mulanya penduduk yang tinggal di Negeri-negeri ini dibahagi kepada orang Melayu dan Orang Asli yang merupakan rakyat Raja-raja Melayu dan tetamu asing yang tidak dianggap sebagai rakyat kepada Raja-raja Melayu.Tidak ada kewarganegaraan mahupun dokumen berkenaan taraf kerakyatan sepertimana di kebanyakan negara-negara lain.
6. Tetamu asing ini hidup mewah di Negeri-negeri Melayu di bawah pentadbiran British dan di jajahan British di Pulau Pinang, Melaka dan Singapura. Orang Melayu yang menjadi rakyat kepada Raja-raja Melayu dan Raja-raja Melayu sendiri tidak sikitpun merasa tergugat dengan bilangan besar orang bukan Melayu dan perbezaan jurang kekayaan dan kemajuan di antara tetamu asing ini dan rakyat Raja-Raja Melayu. Mereka tidak terfikir yang orang asing yang menetap di negara ini akan menuntut hak kewarganegaraan.
7. Apabila Jepun menakluk Negeri-negeri Melayu dan Negeri-negeri Selat,orang Cina merasa tidak selamat kerana Jepun merupakan musuh tradisi mereka.
8. Ramai orang Cina telah menubuhkan dan menganggotai angkatan gerila dan lari ke dalam hutan. Apabila Jepun serah diri, gerila-gerila Cina ini keluar dan merampas balai-balai polis di kawasan pedalaman dan isytihar yang mereka adalah pemerintah negara ini. Mereka menangkap ramai orang, Cina dan Melayu dan beberapa daripada mereka ini dibunuh.
9. Orang Melayu di kampung-kampung membalas dengan membunuh orang Cina di kawasan luar bandar. Ketegangan timbul dan pertempuran antara Cina dan Melayu dielak hanya dengan kedatangan angkatan tentera British. Tetapi perasaan marah dan benci antara kedua-dua kaum ini tetap tinggi.
10. Di dalam keadaan tegang ini British mencadang penubuhan Malayan Union yang akan memberi "tetamu-tetamu" ini hak kerakyatan yang tidak membezakan mereka daripada orang Melayu.
11. Orang Melayu menolak Malayan Union dan cadangan hak kerakyatan ini.Mereka paksa British untuk kembali kepada keadaan asal atau status quo ante di dalam Persekutuan Tanah Melayu (Federation of Malaya) yang baru.
12. Hanya orang Cina yang menjadi rakyat Negeri-negeri Selat layak untukmendapat kerakyatan di dalam Persekutuan yang baru ini. Sudah tentu warganegara keturunan Melayu jauh lebih ramai daripada rakyat Malaya yang berketurunan Cina.
13. Pemimpin-pemimpin Cina merayu kepada British, yang kemudiannya menekan Presiden UMNO, Dato Onn Jaafar supaya mencadangkan agar UMNO dibuka kepada semua kaum. Cadangan ini ditolak lain-lain pemimpin UMNO dan Dato Onn terpaksa melepaskan jawatan.
14. British terus beri tekanan kepada orang Melayu untuk bersikap lebih terbuka berkenaan soal kerakyatan bagi orang bukan Melayu.
15. Presiden UMNO Tunku Abdul Rahman memutuskan untuk menubuhkan pakatan dengan MCA (Malaysian Chinese Association) dan MIC (Malaysian Indian Congress). Dalam pilihanraya Majlis Perundangan Persekutuan (Federal Legislative Assembly) 1955, oleh kerana kurangnya kawasan majoriti penduduk Cina dan India, MCA dan MIC terpaksa letak calon mereka di kawasan yangmempunyai majoriti Melayu selepas UMNO bersetuju untuk tidak bertanding di kawasan-kawasan ini dan sebaliknya menyokong calon Cina MCA dan calon India MIC.
16. Begitu sokongan orang Melayu terhadap calon Perikatan MCA dan MIC hinggakan mereka menang walaupun menentang calon Melayu daripada PAS. Calon MCA dan MIC kesemuanya menang. Hanya UMNO kalah satu kerusi kepada PAS.
17. Tunku sebagai Ketua Menteri Persekutuan Tanah Melayu kemudian memutus untuk menuntut kemerdekaan. British terus berkeras menuntut hak kerakyatan bagi orang Cina dan India sebagai syarat memberi kemerdekaan.
18. Untuk mengatasi halangan British terhadap kemerdekaan dan untuk memenangi sokongan orang Cina dan India Tunku memutuskan untuk beri satu juta kerakyatan kepada kedua-dua komuniti ini berdasarkan hanya kepada permastautin. Salah seorang rakyat baru yang menonjol ialah (Tun) Leong Yew Koh, bekas general di dalam angkatan tentera nasional China yang kemudiannyadilantik Gabenor Melaka.
19. Di peringkat ini pemimpin-pemimpin ketiga-tiga parti yang berdasarkan kepada kaum yang telah mendirikan Kerajaan pemerintahan sendiri di dalam Persekutuan Tanah Melayu (Federation of Malaya) British telah berbincang dan mencapai persetujuan berkenaan syarat perhubungan antara ketiga-tiga kaum di dalam Persekutuan Tanah Melayu yang merdeka.
20. Ianya merupakan agihan yang sama rata. Sebagai balasan untuk satu juta kerakyatan bukan Melayu, orang bukan Melayu mesti mengakui kedudukan istimewa orang Melayu sebagai Bumiputera. Beberapa peruntukan undang-undang seperti kedudukan Islam sebagai agama rasmi, pengekalan tanah rizab Melayu, kedudukan Raja-raja Melayu dan adat istiadat Melayu dan pengagihan jawatan dalam Kerajaan juga termasuk di dalam persefahaman ini.
21. Dalam soal Bahasa Kebangsaan, Bahasa Melayu telah dipersetujui sebagai Bahasa Kebangsaan. Bahasa Inggeris pula sebagai bahasa kedua. Kaum Cina dan India boleh terus gunakan bahasa mereka tetapi bukanlah sebagai bahasa rasmi untuk berkomunikasi.
22. Sekolah rendah Cina dan Tamil juga boleh menggunakan bahasa masing-masing sebagai bahasa pengajar. Bahasa-bahasa ini juga bolehdigunakan di sekolah menengah, tetapi hanya di sekolah menengah swasta.
23. Di pihak mereka pemimpin-pemimpin Cina dan India yang mewakili parti mereka menuntut agar kerakyatan dijadikan hak mereka yang tidak boleh ditarik balik, mereka dibenar kekalkan bahasa, agama dan budaya mereka dan sebagai rakyat mereka diberikan hak politik sepertimana yang diberikankepada semua rakyat.
24. Kebanyakan persetujuan dan persefahaman ini terkandung di dalam Perlembagaan Persekutuan Tanah Melayu merdeka. Bagi setiap yang diperuntukkan kepada orang Melayu, akan sentiasa terdapat peruntukan bagi yang bukan Melayu. Tidak ramai yang sebut akan hakikat ini. Yang menarik perhatian ramai dan yang menjadi tajuk perbalahan ialah apa yang diperuntukkan kepada orang Melayu dan lain-lain kaum Bumiputera sahaja.
25. Demikian walaupun Bahasa Melayu dijadikan Bahasa Kebangsaan, bahasa Cina dan Tamil tetap bebas digunakan di sekolah Cina dan Tamil. Peruntukan ini tidak terdapat di mana-mana negara lain. Bahkan di negara-negara yang liberal sekalipun tidak terdapat jaminan seperti ini yang termaktub di dalam Perlembagaan.
26. Bahasa Kebangsaan ini haruslah dipelajari semua orang agar setiap warganegara Malaya dapat berkomunikasi antara satu sama lain di mana-mana sahaja.
27. Difahamkan bahasa Cina yang di maksudkan di dalam persefahaman tersebut adalah dialek-dialek Cina yang ditutur di Malaysia dan bukannya bahasa kebangsaan negeri China. Demikian bagi kaum India Malaya bahasa Tamil digunakan dan bukannya Hindi atau Urdu atau apa-apa bahasa pun yang menjadi bahasa Kebangsaan di India. Tetapi para pendidik aliran Cina kemudiannyamengguna Bahasa Cina yang menjadi bahasa Kebangsaan negara China iaitu Mandarin.
28. Islam adalah agama rasmi tetapi agama-agama lain boleh dipraktik penganut masing-masing tanpa apa-apa halangan. Sebagai agama rasmi Islam mendapat bantuan Kerajaan. Tiada tersebut tentang bantuan bagi mana-mana agama lain. Bukan Melayu tidak menekankan tentang ini dan Perlembagaan Persekutuan tidak pun sebut tentang bantuan Kerajaan terhadap agama lain.Namun sokongan dan bantuan tetap diberikan.
29. Kuota ditetapkan bagi kakitangan Kerajaan (Malayan Civil Service) dimana orang Melayu akan mendapat empat tempat bagi setiap satu yang diberikankepada orang Cina dan India. Walaubagaimanapun, jawatan profesional diiktiraf terbuka bagi semua kaum kerana dianggap tidak mungkin terdapat cukup bilangan orang Melayu untuk mengisi jawatan-jawatan tersebut.
30. Hasilnya pada awal kemerdekaan terdapat lebih ramai kaum bukan Melayu daripada Melayu yang mengisi jawatan dalam Divisyen Satu.
31. Yang Di-Pertuan Agong atau Raja-raja Melayu akan menentukan kuota biasiswa dan lesen bagi orang Melayu. Tetapi tiada sesiapa yang akan dirampas mana-mana permit atau lesen hanya untuk diberikan kepada kaum Bumiputera.
32. Kedudukan Raja-raja Melayu termaktub dan tidak boleh dipersoalkan.Seorang Yang Di-Pertuan Agong akan dipilih daripada sembilan Raja-raja Melayu dan akan berkhidmat selama lima tahun.
33. Raja-raja akan menjadi Raja berperlembagaan. Kuasa eksekutif akan dilaksanakan oleh Menteri Besar, Ketua Menteri dan Perdana Menteri yang dipilih dan dibantu ahli majlis atau Kabinet. Amalan British dijadikan contoh.
34. Persetujuan yang paling penting ialah pelaksanaan Demokrasi Berparlimen digabungkan dengan Raja Berperlembagaan, sekali lagi seperti yang diamalkan di United Kingdom. Harus diingat pihak British telah mengenakan Kerajaan Kolonial kuku besi ke atas Negeri-negeri Melayu dengan kuasa di letak pada Pejabat Kolonial di London.
35. Sebelum ini Negeri-negeri Melayu diperintah secara feudal di mana Raja-raja Melayu mempunyai kuasa mutlak. Hanya golongan bangsawan yang memainkan peranan dalam politik negeri. Rakyat Melayu tidak langsung ada apa-apa hak politik. Sudah tentu tetamu juga tidak mempunyai suara dalam hal-hal berkenaan politik. Warganegara British keturunan Cina dan India juga tidak mempunyai apa-apa suara walaupun mereka boleh dilantik sebagai Ahli Kehormat Majlis Kerajaan Tempatan atau Perundangan.
36. Keputusan untuk melaksana sistem Kerajaan berlandaskan demokrasi merupakan satu langkah radikal di dalam pentadbiran Kerajaan di PersekutuanTanah Melayu dan Negeri-negeri Melayu. Ini dipersetujui pemimpin ketiga-tiga kaum terbesar yang diwakili parti-parti politik UMNO, MCA dan MIC. Tidak syak lagi yang parti-parti ini mewakili sebahagian besar daripada ketiga-tiga masyarakat di Malaya. Pihak Komunis dan yang berhaluan kiri lain tidak menyatakan persetujuan mereka terhadap persefahaman ini.
37. Suruhanjaya Reid diberi penerangan tentang perjanjian dan persefahaman ini agar ianya akan dimasukkan ke dalam Perlembagaan yang akan digubal.Ketiga-tiga parti meluluskan Perlembagaan yang digubal setelah beberapa pindaan dilakukan. Kesannya Perlembagaan ini menjadi kontrak yang mengikat ketiga-tiga kaum di Persekutuan Tanah Melayu menjelang merdeka pada tahun1957.
38. Apabila Sabah dan Sarawak menyertai Negeri-negeri Semenanjung untuk membentuk Malaysia kontrak sosial ini dipanjangkan kepada kedua-dua negeri ini. Orang Bumiputera Sabah dan Sarawak diberi taraf yang sama dengan orang Melayu. Pada masa ini juga perkataan Bumiputera diperkenalkan untuk membezakan orang Melayu dan orang Bumiputera Sabah, Sarawak daripada yangberketurunan pendatang. Kerana Bahasa Melayu digunakan secara meluas di negeri-negeri Borneo tidak ada kesulitan bagi penerimaan Bahasa Melayu sebagai Bahasa Kebangsaan. Walaupun kaum Bumiputera di kedua-dua negeri ini bukan semuanya orang Islam ini tidak memerlukan pindaan kepada Perlembagaan apabila perkataan Bumiputera diterima. Tetapi definisi rasmi bagi orang Melayu tetap tidak berubah.
39. Oleh itu pembentukan kontrak sosial dimaktubkan dalam pertama, Perlembagaan Persekutuan Tanah Melayu dan seterusnya Malaysia. Untuk mengatakan yang ianya tidak wujud samalah dengan menidakkan kandungan Perlembagaan yang diasaskan kepada penerimaan oleh pemimpin-pemimpin ketiga-tiga kaum terhadap kontrak sosial yang asal.
40. Kesemua tindakan susulan oleh Kerajaan adalah hasil daripada kontrak sosial ini. Hakikatnya pencetus kontrak sosial ini dan pewaris-pewaris mereka yang diiktiraf rakyat di setiap Pilihanraya Umum menunjukkan kesediaan rakyat untuk menghormati kontrak sosial ini.
41. Menidakkan kewujudan kontrak sosial ini ialah seperti berkata yang Malaysia ini wujud di dalam suasana kekosongan, tidak ada Perlembagaan danundang-undang yang berlandaskan kontrak ini.
42. Pelaksanaan kontrak sosial ini memerlukan pemahaman semangatnya yangmendalam. Kontrak sosial ini bertujuan mewujudkan satu negara berbilang kaumyang stabil dan harmoni. Apa jua faktor yang akan akibatkan ketidakstabilandan menghasilkan ketegangan di antara kaum haruslah dianggap tidak sesuaidengan semangat kontrak sosial ini.
43. Selama 50 tahun tidak ada sesiapa yang menyoal kontrak sosial ini.Malahan hari ini pun majoriti kaum Cina dan India dan Bumiputera Melayu dan kaum Bumiputera Sabah dan Sarawak menerima kontrak sosial ini. Tetapi kerana Dato Seri Abdullah Ahmad Badawi pada asasnya kalah dalam pilihanraya 2008 dan sekarang mengetuai Kerajaan yang lemah, pihak ekstrimis dan penyanggah sekarang ini mempersoalkan kontrak sosial ini. Majlis Peguam kini telah menjadi sebuah parti politik yang percaya bahawa kepakarannya dalam undang-undang akan mengecualikan ianya daripada dipersoal tentangkelayakannya dan objektif politiknya.
44. UMNO Abdullah tidak berdaya menangkis apa-apa serangan terhadap kontrak sosial ini. Jika apa-apa terjadi Abdullah dan UMNO harus dipertanggungjawabk an.
Thursday 17 July 2008
Friday 4 July 2008
Financial Crisis of 1997-1998
By Nor Mohamed Yakcop
A moment comes, which rarely comes in a lifetime, when a particular event redefines a person's life and changes the course permanently. For me, the meeting with Dr. Mahathir Mohamad in Buenos Aires (Argentina) on the evening of October 3, 1997 was such an event. It enabled me to devote the next 6 years of my life working for Dr. Mahathir Mohamad, meeting him almost daily.
In the process, it enabled me to see, at very close range, the abilities of this great man.The combination of many noble qualities in one person is rare, and it is this unique combination that has enabled Dr. Mahathir Mohamad to transform Malaysia from an otherwise typical third world country into a thriving and vibrant nation, well on the way to become a developed nation. It is also this combination of qualities that enabled Dr. Mahathir Mohamad to save Malaysia from becoming another IMF nation during the financial crisis of1997 - 1998.
I am often asked about my involvement in the recovery plan implemented onSeptember 1, 1998. It began on September 29, 1997, when I received a telephone call from the office of Dr Mahathir Mohamad informing me that the Prime Minister wanted to see me. The PM was in Cuba at that time, and I asked (in jest) if I was to meet the Prime Minister in Cuba ! I was told (not in jest) that he will be arriving in Buenos Aires on October 3, 1997 and I was to make sure I was in Buenos Aires at least a day before he arrived.
I packed my bags and left for Buenos Aires, and arrived in Buenos Aires on October 2. The PM arrived the following day at 5 pm and we met immediately at his suite. He informed me that he had asked many people to explain to him what was causing the financial crisis but no one was able to give him asatisfactory reply. He asked me whether I could explain to him what exactly was happening.I asked him how much time he had, and he said two hours. I explained to him how the forex market works, about short positions and long positions, about hedging and how currencies are borrowed and sold, the difference between"bid" and "offer" and how funds can be transferred from one country to another at the click of a button. I also explained how the equity market works and the relationship between the forex market and the equity market. Dr. Mahathir hardly said anything, asked one or two questions, and listened intently.After two hours, he had to end the meeting to get ready to go for an official dinner. He asked me about my plans for the night and I said I had been invited for the same dinner. Dr. Mahathir said to me: You go back to your room and write down all that you have been telling me for the last two hours, and see me at 7 am tomorrow.
I went back to my room, skipped dinner, and wrote it all down, finishing at about 6 am.I saw him the next morning at 7 am and gave him the report. He asked me to take a rest and come back again at 2 pm. When I returned, he told me that he had read the report and that he now understands what was happening in the financial markets. We started discussing various methods of overcoming the crisis, and our discussions continued when we returned to Malaysia. I met him almost daily for discussion, sometimes at his house and sometimes at his office. We tried a few mechanisms to overcome the crisis, some of which worked initially, but the hedge funds were so strong that it was difficult to proceed successfully with these mechanisms.
In early 1998, Dr. Mahathir Mohamad asked me to explore the idea of imposing an exchange control regime to overcome the crisis. I remember preparing voluminous notes on this subject. Dr. Mahathir went through the notes carefully, and kept asking for more and more details. We went through many rounds of discussion, until he was finally convinced both with the concept as well as the proposed mechanism. The rest, I guess, is history.
Dr. Mahathir also asked me to prepare a paper on how to put an end to Malaysian shares traded in CLOB (Central Limit Order Book) in Singapore. Dr.Mahathir was of the view that an important reason for the falling stockmarket was the short-selling of Malaysian stocks in CLOB. I prepared the report and Dr. Mahathir understood, for the first time, how exactly CLOB operates. The report, which was also implemented on September 1, 1998, put to an end the trading of Malaysian shares in CLOB. I should add that the exchange control measures were crafted in such a way as to minimize the control aspects and maximize the outcome.
The Prime Minister went through the proposed mechanism many times to make sure that the control elements were as few as possible, but adequate enough to ensure a positive outcome. There were no bureaucratic elements in these measures,such as requiring importers to obtain Bank Negara's permission to import.The Ringgit was also pegged at a level where it was not overvalued.
In almost every other country, which imposes exchange control measures and peg sits currency, there would, almost by definition, be numerous bureaucratic controls, and the currency would also be pegged at an overvalued rate.It is often assumed that the system of exchange control (including fixed exchange rate) that we implemented on September 1, 1998 saved the country.The measures of September 1, 1998 were undoubtedly a necessary condition, but it was not a sufficient condition to overcome the crisis. Malaysia was saved, not by exchange control measures per se, but by Dr. Mahathir Mohamad.
Let me explain. Any other developing country, facing a similar crisis, if it had introduced the measures that we introduced in September 1998, the measures would probably have failed. The fact that in Malaysia these measures succeeded is due to the ability and character of Dr. Mahathir Mohamad. The economy and the financial system, under Dr. Mahathir's leadership, was in a very healthy state–healthy enough for the exchange control measures to be implemented without negative consequences.
Moreover, the Prime Minister's hands-on management style enabled quick and timely decisions to be made, which was vital under the new exchange control regime.Dr. Mahathir, as Prime Minister, had ensured that the Malaysian economy was fundamentally strong. Ringgit was strong and stable. On the back of the currency stability (at RM2.50 against the US dollar) Malaysia was doing very well.
At the end of 1996, real Gross Domestic Product (GDP) grew at almost 8.5 per cent and the growth was expected to continue for many more years.The government was enjoying a fiscal surplus. The external debt was low, at40 per cent of the Gross National Product (GNP). The current account of the balance of payments had narrowed from a deficit of 10 per cent to 5 per cent of GNP, and was expected to improve further. Inflation was at its lowest at2.1 percent. We had steady growth of over 8 per cent for a major part of that period. And this fundamental strength of Malaysia was a critical factor that enabled the exchange control measures to succeed.
For a period of more than a year after the measures of September 1, 1998 were implemented, the Prime Minister met with a small group of us everyday -6 days a week - for at least 2 hours to go through various economic data, including data on loan growth, exports, imports, property overhang etc. This enabled the Prime Minister to take quick actions, whenever required. Iremember one morning when we were going through the property figures, hel ooked at me and directed that I should organize a property fair to clear the overhang of properties. I did, and property worth more than RM 3 billion was sold.
Even after the crisis was over, Dr. Mahathir continued to meet with the group regularly, though no longer on a daily basis. And Dr.Mahathir continued to go through all the economic data with a sharp pencil. No other Prime Minister in the world, either in developed or developing countries, employs such a hands-on approach in managing the economy.
We can see, therefore, that it was not the exchange control measures per se that saved the country but the man — Dr. Mahathir Mohamad — himself.The period 1997 - 1998 was, to paraphrase Charles Dickens, the worst of times, but it was also the best of times. The worst conditions brought out the best in Dr. Mahathir Mohamad. There is a saying that a good leader is like good tea - you only know the true quality when he is in hot water !
Throughout the crisis, the Prime Minister was focused on resolving the crisis. Day and night, he thought of nothing else but the crisis. He read all he could on finance; he kept asking me to prepare notes on various technical issues. Sometimes he was sick with bad flu and cough, but he did not take time off to rest. He was convinced that he had to understand the issues before he could work out the solutions. His native intelligence and ability to focus on core issues were there throughout the crisis. He did not show any sign of fear even at the worst of time, only concern at the fast deteriorating state of the economy. He was, at all times, confident that he would prevail in the end.
I would like to add two additional points related to the financial crisis.The first is that, in implementing the measures of September 1, 1998, Dr.Mahathir not only saved Malaysia but the neighbouring countries as well. Let me explain. When Malaysia imposed its exchange control measures on September 1, 1998, the currency speculators realised that the other affected countries (Thailand, Indonesia and South Korea) could also impose similar controls,and they, therefore, stopped their activities in its track. The speculators backed off. They bought back the currencies that they had sold. This is resulted in the regional currencies appreciating.
Moreover, the International Monetary Fund (IMF) was not happy with what Malaysia had done, particularly since, after implementing the measures, we did exactly the opposite of what the IMF wanted us to do, i.e. we lowered our interest rates and injected liquidity into the system. The IMF, therefore, started relaxing conditions in other countries and allowed them to lower their interest rates and allowed them to inject liquidity to stimulate their economies so that Malaysia would not outperform the IMF countries. Therefore, it is no exaggeration to say that Dr. Mahathir Mohamad not only saved Malaysia, but the other affected countries in the region as well - Thailand, Indonesia and South Korea.
My second point is regarding what would have happened if the exchange control measures were not implemented. If the measures were not implemented,many of corporations in Malaysia would have gone under, due to the high interest rates. When the corporations fall like dominos, banks would have faced severe liquidity and solvency problems due to the ballooning NPLs.
The problems of the banks would have resulted in a credit squeeze, which would have led to another round of corporate failures. The Government's revenue would have fallen drastically as fewer firms would be paying corporate taxes, thereby reducing the Government's ability to stimulate the economy through fiscal policy measures.
As a result of the problems faced by corporations and banks, unemployment would have increased substantially, leading to a second round of problems. This is the classic vicious cycle,which could have, in the end, destroyed the social and political stabilityof the country. This was a scenario that was waiting to happen. It did not happen because of the decisiveness and guts of Dr. Mahathir Mohamad, who decided to take the path less travelled. We owe Dr. Mahathir much gratitude for what he has done for Malaysia over the last 22 years. Solving the financial crisis of 1997 - 1998 was just one,albeit perhaps the most important, of Dr. Mahathir Mohamad's many contributions to the nation.
On a personal note, over the last 6 years, I have come to admire this greatman for his abilities, his high moral values and, most of all, for his sincerity. Certainly, a man like Dr. Mahathir Mohamad is not born everyday.(23rd. October, 2003)
A moment comes, which rarely comes in a lifetime, when a particular event redefines a person's life and changes the course permanently. For me, the meeting with Dr. Mahathir Mohamad in Buenos Aires (Argentina) on the evening of October 3, 1997 was such an event. It enabled me to devote the next 6 years of my life working for Dr. Mahathir Mohamad, meeting him almost daily.
In the process, it enabled me to see, at very close range, the abilities of this great man.The combination of many noble qualities in one person is rare, and it is this unique combination that has enabled Dr. Mahathir Mohamad to transform Malaysia from an otherwise typical third world country into a thriving and vibrant nation, well on the way to become a developed nation. It is also this combination of qualities that enabled Dr. Mahathir Mohamad to save Malaysia from becoming another IMF nation during the financial crisis of1997 - 1998.
I am often asked about my involvement in the recovery plan implemented onSeptember 1, 1998. It began on September 29, 1997, when I received a telephone call from the office of Dr Mahathir Mohamad informing me that the Prime Minister wanted to see me. The PM was in Cuba at that time, and I asked (in jest) if I was to meet the Prime Minister in Cuba ! I was told (not in jest) that he will be arriving in Buenos Aires on October 3, 1997 and I was to make sure I was in Buenos Aires at least a day before he arrived.
I packed my bags and left for Buenos Aires, and arrived in Buenos Aires on October 2. The PM arrived the following day at 5 pm and we met immediately at his suite. He informed me that he had asked many people to explain to him what was causing the financial crisis but no one was able to give him asatisfactory reply. He asked me whether I could explain to him what exactly was happening.I asked him how much time he had, and he said two hours. I explained to him how the forex market works, about short positions and long positions, about hedging and how currencies are borrowed and sold, the difference between"bid" and "offer" and how funds can be transferred from one country to another at the click of a button. I also explained how the equity market works and the relationship between the forex market and the equity market. Dr. Mahathir hardly said anything, asked one or two questions, and listened intently.After two hours, he had to end the meeting to get ready to go for an official dinner. He asked me about my plans for the night and I said I had been invited for the same dinner. Dr. Mahathir said to me: You go back to your room and write down all that you have been telling me for the last two hours, and see me at 7 am tomorrow.
I went back to my room, skipped dinner, and wrote it all down, finishing at about 6 am.I saw him the next morning at 7 am and gave him the report. He asked me to take a rest and come back again at 2 pm. When I returned, he told me that he had read the report and that he now understands what was happening in the financial markets. We started discussing various methods of overcoming the crisis, and our discussions continued when we returned to Malaysia. I met him almost daily for discussion, sometimes at his house and sometimes at his office. We tried a few mechanisms to overcome the crisis, some of which worked initially, but the hedge funds were so strong that it was difficult to proceed successfully with these mechanisms.
In early 1998, Dr. Mahathir Mohamad asked me to explore the idea of imposing an exchange control regime to overcome the crisis. I remember preparing voluminous notes on this subject. Dr. Mahathir went through the notes carefully, and kept asking for more and more details. We went through many rounds of discussion, until he was finally convinced both with the concept as well as the proposed mechanism. The rest, I guess, is history.
Dr. Mahathir also asked me to prepare a paper on how to put an end to Malaysian shares traded in CLOB (Central Limit Order Book) in Singapore. Dr.Mahathir was of the view that an important reason for the falling stockmarket was the short-selling of Malaysian stocks in CLOB. I prepared the report and Dr. Mahathir understood, for the first time, how exactly CLOB operates. The report, which was also implemented on September 1, 1998, put to an end the trading of Malaysian shares in CLOB. I should add that the exchange control measures were crafted in such a way as to minimize the control aspects and maximize the outcome.
The Prime Minister went through the proposed mechanism many times to make sure that the control elements were as few as possible, but adequate enough to ensure a positive outcome. There were no bureaucratic elements in these measures,such as requiring importers to obtain Bank Negara's permission to import.The Ringgit was also pegged at a level where it was not overvalued.
In almost every other country, which imposes exchange control measures and peg sits currency, there would, almost by definition, be numerous bureaucratic controls, and the currency would also be pegged at an overvalued rate.It is often assumed that the system of exchange control (including fixed exchange rate) that we implemented on September 1, 1998 saved the country.The measures of September 1, 1998 were undoubtedly a necessary condition, but it was not a sufficient condition to overcome the crisis. Malaysia was saved, not by exchange control measures per se, but by Dr. Mahathir Mohamad.
Let me explain. Any other developing country, facing a similar crisis, if it had introduced the measures that we introduced in September 1998, the measures would probably have failed. The fact that in Malaysia these measures succeeded is due to the ability and character of Dr. Mahathir Mohamad. The economy and the financial system, under Dr. Mahathir's leadership, was in a very healthy state–healthy enough for the exchange control measures to be implemented without negative consequences.
Moreover, the Prime Minister's hands-on management style enabled quick and timely decisions to be made, which was vital under the new exchange control regime.Dr. Mahathir, as Prime Minister, had ensured that the Malaysian economy was fundamentally strong. Ringgit was strong and stable. On the back of the currency stability (at RM2.50 against the US dollar) Malaysia was doing very well.
At the end of 1996, real Gross Domestic Product (GDP) grew at almost 8.5 per cent and the growth was expected to continue for many more years.The government was enjoying a fiscal surplus. The external debt was low, at40 per cent of the Gross National Product (GNP). The current account of the balance of payments had narrowed from a deficit of 10 per cent to 5 per cent of GNP, and was expected to improve further. Inflation was at its lowest at2.1 percent. We had steady growth of over 8 per cent for a major part of that period. And this fundamental strength of Malaysia was a critical factor that enabled the exchange control measures to succeed.
For a period of more than a year after the measures of September 1, 1998 were implemented, the Prime Minister met with a small group of us everyday -6 days a week - for at least 2 hours to go through various economic data, including data on loan growth, exports, imports, property overhang etc. This enabled the Prime Minister to take quick actions, whenever required. Iremember one morning when we were going through the property figures, hel ooked at me and directed that I should organize a property fair to clear the overhang of properties. I did, and property worth more than RM 3 billion was sold.
Even after the crisis was over, Dr. Mahathir continued to meet with the group regularly, though no longer on a daily basis. And Dr.Mahathir continued to go through all the economic data with a sharp pencil. No other Prime Minister in the world, either in developed or developing countries, employs such a hands-on approach in managing the economy.
We can see, therefore, that it was not the exchange control measures per se that saved the country but the man — Dr. Mahathir Mohamad — himself.The period 1997 - 1998 was, to paraphrase Charles Dickens, the worst of times, but it was also the best of times. The worst conditions brought out the best in Dr. Mahathir Mohamad. There is a saying that a good leader is like good tea - you only know the true quality when he is in hot water !
Throughout the crisis, the Prime Minister was focused on resolving the crisis. Day and night, he thought of nothing else but the crisis. He read all he could on finance; he kept asking me to prepare notes on various technical issues. Sometimes he was sick with bad flu and cough, but he did not take time off to rest. He was convinced that he had to understand the issues before he could work out the solutions. His native intelligence and ability to focus on core issues were there throughout the crisis. He did not show any sign of fear even at the worst of time, only concern at the fast deteriorating state of the economy. He was, at all times, confident that he would prevail in the end.
I would like to add two additional points related to the financial crisis.The first is that, in implementing the measures of September 1, 1998, Dr.Mahathir not only saved Malaysia but the neighbouring countries as well. Let me explain. When Malaysia imposed its exchange control measures on September 1, 1998, the currency speculators realised that the other affected countries (Thailand, Indonesia and South Korea) could also impose similar controls,and they, therefore, stopped their activities in its track. The speculators backed off. They bought back the currencies that they had sold. This is resulted in the regional currencies appreciating.
Moreover, the International Monetary Fund (IMF) was not happy with what Malaysia had done, particularly since, after implementing the measures, we did exactly the opposite of what the IMF wanted us to do, i.e. we lowered our interest rates and injected liquidity into the system. The IMF, therefore, started relaxing conditions in other countries and allowed them to lower their interest rates and allowed them to inject liquidity to stimulate their economies so that Malaysia would not outperform the IMF countries. Therefore, it is no exaggeration to say that Dr. Mahathir Mohamad not only saved Malaysia, but the other affected countries in the region as well - Thailand, Indonesia and South Korea.
My second point is regarding what would have happened if the exchange control measures were not implemented. If the measures were not implemented,many of corporations in Malaysia would have gone under, due to the high interest rates. When the corporations fall like dominos, banks would have faced severe liquidity and solvency problems due to the ballooning NPLs.
The problems of the banks would have resulted in a credit squeeze, which would have led to another round of corporate failures. The Government's revenue would have fallen drastically as fewer firms would be paying corporate taxes, thereby reducing the Government's ability to stimulate the economy through fiscal policy measures.
As a result of the problems faced by corporations and banks, unemployment would have increased substantially, leading to a second round of problems. This is the classic vicious cycle,which could have, in the end, destroyed the social and political stabilityof the country. This was a scenario that was waiting to happen. It did not happen because of the decisiveness and guts of Dr. Mahathir Mohamad, who decided to take the path less travelled. We owe Dr. Mahathir much gratitude for what he has done for Malaysia over the last 22 years. Solving the financial crisis of 1997 - 1998 was just one,albeit perhaps the most important, of Dr. Mahathir Mohamad's many contributions to the nation.
On a personal note, over the last 6 years, I have come to admire this greatman for his abilities, his high moral values and, most of all, for his sincerity. Certainly, a man like Dr. Mahathir Mohamad is not born everyday.(23rd. October, 2003)
How to counter petrol hike
A man eats two eggs each morning for breakfast. When he goes to thegrocery store he pays 60 cents a dozen. Since a dozen eggs won'tlast a week he normally buys two dozens at a time.
One day while buying eggs he notices that the price has risen to 72 cents. The next time he buys groceries, eggs are 76 cents a dozen.When asked to explain the price of eggs the store owner says, "The price has gone up and I have to raise my price accordingly" .
This store buys 100 dozen eggs a day. He checked around for a better price and all the distributors have raised their prices. The distributors have begun to buy from the huge egg farms. The small egg farms havebeen driven out of business. The huge egg farms sell 100,000 dozen eggs a day to distributors. With no competition, they can set the price as they see fit.
The distributors then have to raise their prices to the grocery stores. And on and on and on. As the man kept buying eggs the price kept going up. He saw the big eggtrucks delivering 100 dozen eggs each day. Nothing changed there. He checked out the huge egg farms and found they were selling 100,000 dozen eggs to the distributors daily. Nothing had changed but the price of eggs.
Then week before Thanksgiving the price of eggs shot up to $1.00 adozen. Again he asked the grocery owner why and was told, "Cakes and baking for the holiday". The huge egg farmers know there will be alot of baking going on and more eggs will be used. Hence, the price ofeggs goes up. Expect the same thing at Christmas and other times whenf amily cooking, baking, etc. happen.This pattern continues until the price of eggs is 2.00 a dozen.
The man says, " There must be something we can do about the price of eggs".He starts talking to all the people in his town and they decide to stop buying eggs. This didn't work because everyone needed eggs. Finally, the man suggested only buying what you need. He ate 2 eggs a day. On the way home from work he would stop at the grocery and buy two eggs. Everyone in town started buying 2 or 3 eggs a day.The grocery store owner began complaining that he had too many eggs in his cooler. He told the distributor that he didn't need any eggs. Maybe wouldn't need any all week.
The distributor had eggs piling up at his warehouse. He told the huge egg farms that he didn't have any room for eggs would not need any forat least two weeks.At the egg farm, the chickens just kept on laying eggs. To relieve the pressure, the huge egg farm told the distributor that they could buy the eggs at a lower price.The distributor said, " I don't have the room for the %$&^*&% egg seven if they were free".
The distributor told the grocery store owner that he would lower the price of the eggs if the store would start buying again.The grocery store owner said, "I don't have room for more eggs. The customers are only buying 2 or 3 eggs at a time. Now if you were to drop the price of eggs back down to the original price, the customers would start buying by the dozen again".
The distributors sent that proposal to the huge egg farmers but the eggfarmers liked the price they were getting for their eggs but, those chickens just kept on laying. Finally, the egg farmers lowered the price of their eggs. But only a few cents.The customers still bought 2 or 3 eggs at a time. They said, "when the price of eggs gets down to where it was before, we will start buying by the dozen.
"Slowly the price of eggs started dropping. The distributors had to slash their prices to make room for the eggs coming from the egg farmers.The egg farmers cut their prices because the distributors wouldn't buy at a higher price than they were selling eggs for. Anyway, they had full warehouses and wouldn't need eggs for quite a while.And those chickens kept on laying.Eventually, the egg farmers cut their prices because they were throwing away eggs they couldn't sell.The distributors started buying again because the eggs were priced to where the stores could afford to sell them at the lower price.And the customers starting buying by the dozen again.
Now, transpose this analogy to the gasoline industry.What if everyone only bought $10.00 worth of gas each time they pulledt o the pump? The dealer's tanks would stay semi full all the time. The dealers wouldn't have room for the gas coming from the huge tank farms.The tank farms wouldn't have room for the gas coming from the refiningplants. And the refining plants wouldn't have room for the oil beingoff loaded from the huge tankers coming from the oil fiends.Just $10.00 each time you buy gas. Don't fill it up. You may have to stop for gas twice a week but, the price should come down.Think about it.As an added note...When I buy $10.00 worth of gas that leaves my tank alittle under quarter full. The way prices are jumping around, you can buy gas for $2.65 a gallon and then the next morning it can be $2.15.If you have your tank full of $2.65 gas you don't have room for the $2.15 gas. You might not understand the economics of only buying two eggs at a time but, you can't buy cheaper gas if your tank is full ofthe high priced stuff.Also, don't buy anything else at the gas station; don't give them anymore of your hard earned money than what you spend on gas, until the prices come down..."
One day while buying eggs he notices that the price has risen to 72 cents. The next time he buys groceries, eggs are 76 cents a dozen.When asked to explain the price of eggs the store owner says, "The price has gone up and I have to raise my price accordingly" .
This store buys 100 dozen eggs a day. He checked around for a better price and all the distributors have raised their prices. The distributors have begun to buy from the huge egg farms. The small egg farms havebeen driven out of business. The huge egg farms sell 100,000 dozen eggs a day to distributors. With no competition, they can set the price as they see fit.
The distributors then have to raise their prices to the grocery stores. And on and on and on. As the man kept buying eggs the price kept going up. He saw the big eggtrucks delivering 100 dozen eggs each day. Nothing changed there. He checked out the huge egg farms and found they were selling 100,000 dozen eggs to the distributors daily. Nothing had changed but the price of eggs.
Then week before Thanksgiving the price of eggs shot up to $1.00 adozen. Again he asked the grocery owner why and was told, "Cakes and baking for the holiday". The huge egg farmers know there will be alot of baking going on and more eggs will be used. Hence, the price ofeggs goes up. Expect the same thing at Christmas and other times whenf amily cooking, baking, etc. happen.This pattern continues until the price of eggs is 2.00 a dozen.
The man says, " There must be something we can do about the price of eggs".He starts talking to all the people in his town and they decide to stop buying eggs. This didn't work because everyone needed eggs. Finally, the man suggested only buying what you need. He ate 2 eggs a day. On the way home from work he would stop at the grocery and buy two eggs. Everyone in town started buying 2 or 3 eggs a day.The grocery store owner began complaining that he had too many eggs in his cooler. He told the distributor that he didn't need any eggs. Maybe wouldn't need any all week.
The distributor had eggs piling up at his warehouse. He told the huge egg farms that he didn't have any room for eggs would not need any forat least two weeks.At the egg farm, the chickens just kept on laying eggs. To relieve the pressure, the huge egg farm told the distributor that they could buy the eggs at a lower price.The distributor said, " I don't have the room for the %$&^*&% egg seven if they were free".
The distributor told the grocery store owner that he would lower the price of the eggs if the store would start buying again.The grocery store owner said, "I don't have room for more eggs. The customers are only buying 2 or 3 eggs at a time. Now if you were to drop the price of eggs back down to the original price, the customers would start buying by the dozen again".
The distributors sent that proposal to the huge egg farmers but the eggfarmers liked the price they were getting for their eggs but, those chickens just kept on laying. Finally, the egg farmers lowered the price of their eggs. But only a few cents.The customers still bought 2 or 3 eggs at a time. They said, "when the price of eggs gets down to where it was before, we will start buying by the dozen.
"Slowly the price of eggs started dropping. The distributors had to slash their prices to make room for the eggs coming from the egg farmers.The egg farmers cut their prices because the distributors wouldn't buy at a higher price than they were selling eggs for. Anyway, they had full warehouses and wouldn't need eggs for quite a while.And those chickens kept on laying.Eventually, the egg farmers cut their prices because they were throwing away eggs they couldn't sell.The distributors started buying again because the eggs were priced to where the stores could afford to sell them at the lower price.And the customers starting buying by the dozen again.
Now, transpose this analogy to the gasoline industry.What if everyone only bought $10.00 worth of gas each time they pulledt o the pump? The dealer's tanks would stay semi full all the time. The dealers wouldn't have room for the gas coming from the huge tank farms.The tank farms wouldn't have room for the gas coming from the refiningplants. And the refining plants wouldn't have room for the oil beingoff loaded from the huge tankers coming from the oil fiends.Just $10.00 each time you buy gas. Don't fill it up. You may have to stop for gas twice a week but, the price should come down.Think about it.As an added note...When I buy $10.00 worth of gas that leaves my tank alittle under quarter full. The way prices are jumping around, you can buy gas for $2.65 a gallon and then the next morning it can be $2.15.If you have your tank full of $2.65 gas you don't have room for the $2.15 gas. You might not understand the economics of only buying two eggs at a time but, you can't buy cheaper gas if your tank is full ofthe high priced stuff.Also, don't buy anything else at the gas station; don't give them anymore of your hard earned money than what you spend on gas, until the prices come down..."
Malaysian Astronaut
MALAYSIAN ASTRONAUTS
American Spaceman is called Astronaut
Russian Spaceman is called Cosmonaut
Chinese Spaceman is called Taikonaut
Malaysian Spaceman??? - Can-or-naut
Datuk Najib was thinking about sending somebody into space. Three potential can-or-nauts were called for an interview - one Indian, one Malay and one Chinese.
Najib interviews the Indian first: 'So, Muthu, this is a dangerous mission. How much do you think you should be paid?'
Muthu replied: 'Ten million ringgit.
' 'Why so much?' asks Najib.
'Very dangerous mission, Datuk. Maybe no come back!' replied Muthu.
'That's understandable, ' says Najib.
'Thank you.. Please ask the Malay guy to come here,'
So the Malay walks up, and is asked the same question.
'Alamak!...20 million, Datuk,' replied the Malay candidate.
'Twenty million? That's twice as much! Even the aneh before you asked for only ten million.'
'You see, Datuk,' explains Mat, 'I have 4 wives and 15 children ... With 20 of us, it is a big family to support when I am gone...!'
'I see,' says D.Najib. 'Okay, can you ask that Chinese guy to come then?'
The Chinese guy comes in and Najib asks, 'Ah Chong, given this is a very risky mission, how much do you want?'
Ah Chong thinks for a while, and says, '30 million.'
Najib appears shocked. 'What?!? 30 million! Why so much?'
Ah Chong beckons Najib to come closer. He quietly whispers into his ear, 'Datuk, you take 10 million, i take 10 million, and then use the extra ten million, send that aneh to space lah!'
And...the Muthu was finally sent out to space....
Samy Vellu ditemuramah tentang program angkasawan negara.
Samy: '...Bagi saya, ini semua adalah satu pembaziran atas duit rakyat.Kita sepatutnya tidak hantar mereka ke bulan, tapi hantar mereka pergi matahari. Barulah USA, Russia, respect sama kita....'
Penemuramah: Tapi Dato' Seri, matahari kan panas.. Macam mana mau pergi sana ?
Samy: Cit! itu pasal la u tara jadi mintri. Saya suda lebey 30 tahun jadi mintri, saya musti ada jalan penyelesaian. Kita jangan pergi siang, manyak panas. kita pigi malam, baru ada sujuuuuuk... ...
American Spaceman is called Astronaut
Russian Spaceman is called Cosmonaut
Chinese Spaceman is called Taikonaut
Malaysian Spaceman??? - Can-or-naut
Datuk Najib was thinking about sending somebody into space. Three potential can-or-nauts were called for an interview - one Indian, one Malay and one Chinese.
Najib interviews the Indian first: 'So, Muthu, this is a dangerous mission. How much do you think you should be paid?'
Muthu replied: 'Ten million ringgit.
' 'Why so much?' asks Najib.
'Very dangerous mission, Datuk. Maybe no come back!' replied Muthu.
'That's understandable, ' says Najib.
'Thank you.. Please ask the Malay guy to come here,'
So the Malay walks up, and is asked the same question.
'Alamak!...20 million, Datuk,' replied the Malay candidate.
'Twenty million? That's twice as much! Even the aneh before you asked for only ten million.'
'You see, Datuk,' explains Mat, 'I have 4 wives and 15 children ... With 20 of us, it is a big family to support when I am gone...!'
'I see,' says D.Najib. 'Okay, can you ask that Chinese guy to come then?'
The Chinese guy comes in and Najib asks, 'Ah Chong, given this is a very risky mission, how much do you want?'
Ah Chong thinks for a while, and says, '30 million.'
Najib appears shocked. 'What?!? 30 million! Why so much?'
Ah Chong beckons Najib to come closer. He quietly whispers into his ear, 'Datuk, you take 10 million, i take 10 million, and then use the extra ten million, send that aneh to space lah!'
And...the Muthu was finally sent out to space....
Samy Vellu ditemuramah tentang program angkasawan negara.
Samy: '...Bagi saya, ini semua adalah satu pembaziran atas duit rakyat.Kita sepatutnya tidak hantar mereka ke bulan, tapi hantar mereka pergi matahari. Barulah USA, Russia, respect sama kita....'
Penemuramah: Tapi Dato' Seri, matahari kan panas.. Macam mana mau pergi sana ?
Samy: Cit! itu pasal la u tara jadi mintri. Saya suda lebey 30 tahun jadi mintri, saya musti ada jalan penyelesaian. Kita jangan pergi siang, manyak panas. kita pigi malam, baru ada sujuuuuuk... ...
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