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Does Malaysia Need To Float A Bond To Establish A Benchmark In The World Market? Statement by Dr Tan Seng Giaw, DAP National Vice-Chairman and MP for Kepong on the national debt. 21 October 1999. | |||||||
| On 19 October 1999, I asked a question on the national debt and the debt-servicing ratio. The Deputy Finance Minister Dato' Wong See Wah replied that up to June 1999, the total national debt was RM190.9 billion or 56.8% Gross national Product, GDP. Out of this, RM131.9 billion or 56.8% were medium and long-term and RM17.4 billion or 10.82% were loans by the Federal Government. RM53.5 billion or 33.25% were borrowed by non-government public bodies and RM61 billion or 18.02% were by the private sector. The short-term loans were RM29 billion or 18.02% and the debt-servicing ratio was 6.6% for 1998 and likely to remain so in 1999. The Deputy Ministeer said that the ratio was the lowest compared to our neighbours. I retorted that he did not compare with our neighbour Singapore. He did not answer. I asked a supplementary question on whether he was willing to give a true answer to the repeated statements by the Government that we had enough internal resources. If so, why did we have to borrow from the outside world? Dato' Wong's remarked that up to June 1999, our national debt was RM91 billion, out of which only RM17 | |
billion were borrowed from overseas. This showed that we had a great deal of local resources. Before we borrowed from the outside world, we had to consider our internal resources that were strong. He stressed that we borrowed from overseas by issuing bonds. The rationale was to establish a benchmark in the world market and to create Malaysia's name again. Hitherto, there was a show registration of AS$3 billion Malaysian bonds and we only took up AS$1 billion. If Malaysia has so much internal resources, she should not go overseas to borrow money especially at a high interest rate of 10 or 12%. Why can't we use our domestic resources? If we can become a debt-free nation, it will be the best benchmark in the international market. From the Deputy Minister's reply, we can assume that either he is not telling us the truth or the logic of debt management is very odd. Although it is very difficult to remain free of debt and to acquire huge external reserves, these should be the objectives of sound financial management. Singapore, Taiwan and Hong Kong have huge reserves. They can withstand economic crisis better.
Dr Tan Seng Giaw | |||||
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