August 28, 1999 
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| August 28, 1999 | atimes.com | |
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| Southeast Asia Mahathir warns against over-optimism KUALA LUMPUR - Prime Minister Mahathir Mohamad said Friday that he has begun to worry that Malaysians may already be overly optimistic, although the economy is now on the mend. ''I worry because over-optimism breeds complacency at a time when we need dedication, commitment and preseverance,'' he said. The economy was still vulnerable and the risks were still there. ''We will no doubt see modest growth this year, but flaws will remain. The fixed exchange rate and selective capital controls have helped to provide a conducive environment to kick-start the economy and restructure the banking system.'' The prime minister said there can be no quick fixes for Malaysia's economy and that the government was realistic enough not to expect them. It was no surprise that the recovery process has been slow, and not without pain. He pointed out that a large part of the problem strong resistance from those with vested interests. ''As a democracy, we cannot force people to do what they don't want to do. As long as flaws in the international monetary system are not corrected, small nations are a like little boats in a turbulent sea and are therefore vulnerable,'' he said. Dr Mahathir also noted that ''we cannot therefore return to that imperfect system. We have the well-being of our people and country at heart but we do appreciate that economic well-being of the world has an important bearing on us. Therefore, we would like to see the reform of the international monetary system caried out as soon as possible.'' For the reforms to be worthwhile, Dr Mahathir said the mind-set of the powers that be must change, Any attempt to preserve the rights of a few currency traders will only negate the results of the reforms, he stressed. Malaysia believes in the concept of free markets, but more as an article of faith and less as a religion. Mahathir said the free market is an imperfect system devised by imperfect man. ''It should be adhered to faithfully only if it delivers the results for which it was designed. If it doesn't, we are not afraid to re-examine it, to modify it, or in the last resort, to discard it altogether.'' He also said the problem with free markets - as with all systems - is the tendency to widen its interpretation. ''When the free market was adopted, no one really thought that currencies should be regarded as commodities and traded like coffee beans or wheat. That came much later when smart people in some financial centers felt that if they can make easy money by selling money in the free market, then why not?'' ''To these bright people,'' he said,''the main thing is that the free market offers the opportunity to make money. If by selling money, millions are forced out of work, starved, if the economy of countries and whole regions are destroyed, if political upheavals occur - these are irrelevant. Dr Mahathir explained that Malaysia believed the free market system has been abused by currency traders and short-term capitalists. He said they had been profiteering and ''Malaysia does not see any reason why it should adhere faithfully to the free market when the profiteers are not subscribing to the original intention of the free market.'' ''We subscribed to the free market because of the results it promised. Now we see that not only are the promised results not being achieved, but whatever little had been achieved had been systematically destroyed by the same free market system. As a doctor, I have been taught to eliminate the cause in order to cure the patient. Therefore by preventing Malaysian currency, in whatever form from, falling into the hands of currency traders, deliberate manipulation of our exchnage rates has become impossible.'' ''The government regained its right to determine the exchange rate while stock market manipulators were deprived of access to the stocks they wished to short sell. That stopped manipulation of the stock exchnage in order to, intentionally or not, bankrupt the banks, Malaysian businesses and finally the government.'' (Bernama/Asia Pulse) | |||||||||
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