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Work Out A Strategy For Dealing With The Capital Control In The Face Of Globalisation Statement by Dr Tan Seng Giaw, DAP National Vice-Chairman and MP for Kepong on the retabling of the 2000 Malayisan Budget. 26.2.2000 | |||||||
| On 29 October 1999, the 2000 Budget was first presented. The total expenditure was RM78.03 billion, RM53.35 billion current expenditure and RM 24.67 billion development expenditure. As Parliament was dissolved on 11.11.1999 to pave way for the 29.11.1999 general elections, the budget must be retabled. This was done on 25.2.2000. The Finance Minister used the opportunity to crow about the new statistics such as the growth rate of Gross Domestic Product, GDP, of 5.8% instead of 5% and the revenues of RM 61.8 billion instead of 58.8 billion as well as the Composite Index of the Kuala Lumpur Stock Exchange reaching 1009.53 points as opposed to 262.7 points on 1.9.1998. Despite these figures, there are hardly any new things in the Budget and it will be months before the general population will experience the real recovery of the economy from over two years of economic crisis. While the 1999 trade surplus was RM 72.3 billion and the infaltion rate of 2.8% compared to 5.3% in 1998 and the foreign reserves of about US$ 32 billion, the reserves are still a very long way to US$100 billion which should be the long-term objective. There must be great efforts to ensure consistency in the policies, regulations and measures including the stock exchange, so that investors would not want to take their money out of the country. Business politics is another big obstacle which is hardly touched. Previously, we have asked for a comprehensive plan to deal | |
with all aspects of globalisaton. Now, to deal with globalisation, liberalisation and advancement of information technology, the Finance Ministry has set up a Think Tank to prepare the strategic action plan. A steering committee is also formed to work out a masterplan for the k-economy. We have to wait and see how effective these will be. It is disappointing that there is scarcely any mention of how the Government intends to deal with mergers of banks with the 10 anchor banks instead of six. The impression is that bank mergers can be done witin a short period fixed by Bank Negara, the Central Bank. This is unfortunate. While it is necessary to avoid submitting to the humiliating conditions of the International Monetary Fund, IMF, such as by introducing the capital control, we still have to think of how to tackle the international financial system. Ours is a small economy. Once we follow the World Trade Organization regulations in two or three years or more, can the capital control pegging RM 3.8 at U.S.$ 1 still go on in the imperfect world financial architecture? The above-mentioned Think Tank and Steering Committee should work out a strategy for handling capital control in the changing world. We should continue to fight for a change for the better in the world financial architecture. Ideally, once the world financial architecture is changed, we can abolish the capital control. In practice, the change, if at all, will not come so fast.
Dr Tan Seng Giaw | |||||
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