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FEER: A Fragile Balance
By S. Jayasankaran
5/5/2001 6:39 pm Sat
[Kerajaan asyik mengatakan ekonomi sudah pulih sehingga belanjawan
lepas begitu optimis dengan keyakinan ini. Tetapi tahun ini sahaja
pelbagai rancangan atau formula baru terpaksa diketengahkan kerana
kita semakin terjerut ke kancah kemuflisan. Rezab asing negara sudah
tinggal $27.2 bilion pada penghujung Mac - satu kejatuhan 19% dari
kemuncak pada September lepas. Ramai analis berpendapat ia susut
sebegitu banyak bukan kerana orang luar - tetapi kerana orang dalam
negara sendiri. Modal dalam negara telah keluar. Pegawai bank negara
kini sudah mula memeriksa beg yang berisi wang keluar.
Kita sudah lapurkan beberapa kali gejala ini di KM2. Faedah yang lebih
tinggi di negara luar akan menyebabkan orang kaya - termasuk hartawan
Umno sendiri memindahkan wang mereka keluar negara seperti Singapura.
Pengilang pula menyimpan wang mereka di luar - sebagai protes nilai
ringgit yang terlalu tinggi yang menggugat ekspot mereka. Kerajaan kini
amat berharap U.S. Federal Reserve memotong kadar faedahnya supaya
modal dalam negara Malaysia tidak keluar.
Awal tahun ini juga matawang serantau telah merosot teruk antara 5% dan 18%.
Ini menyebabkan ringgit tidak kompetetif, saham syarikat tempatan lebih
mahal dan ekspot tergugat kerana ringgit lebih mahal. Kita merupakan
negara pengeluar minyak kelapa sawit terbesar dunia tetapi itu pun sudah
tidak dapat menolong kita kerana harganya sudah jatuh menggila. Kes
terbaru kita terpaksa berdagang secara barter dengan India dan Cina
menunjukkan betapa teruknya kuasa wang kita.
Sebelum kawalan modal 1998, kadar faedah tiga bulan antara bank di dalam
negara pernah mencecah 9% - kini ia cuma 3.3%. Kadar pertumbuhan dijangka
3-4% sahaja, bukan 5-6% sebagaimana yang diteka 6 bulan lepas. BSKL sendiri
sudah kehilangan 12% nilainya pada awal tahun ini sahaja.
Ini semua menunjukkan ekonomi Malaysia tidaklah sestabil mana. Apa yang
dilakukan oleh kerajaan selama ini melalui formula kawalan modal dan
lain-lain formula tidaklah sehebat mana. Ia sudah dan akan menyusahkan
kita lagi sebenarnya angkara kedegilan Mahathir membaiki ekonomi dalam
artikata yang sebenarnya.
A Fragile Balance
By S. Jayasankaran
In early 1999, Francis Yeoh, the articulate chieftain of construction
and power conglomerate YTL Corp., predicted that Malaysia's
foreign-exchange reserves could top $40 billion by early 2001 as a
result of capital controls introduced at the height of the Asian
Crisis. "It's a no-brainer," he told the REVIEW. "We've got a
competitive exchange rate and imports are down."
Until September last year, Yeoh's prediction still had some currency.
Not now. The central bank's reserves, at $27.2 billion at the end of
March, have fallen by 19% from their peak in September.
Worse still, analysts say that the inexorability of the reserves'
decline suggests that not just foreign but also domestic capital is
taking flight. The central bank isn't taking any chances; the hand
luggage of Malaysians travelling abroad from the Kuala Lumpur
International Airport is now subject to spot checks by central bank
Meanwhile, regional currencies have fallen against the U.S. dollar
since January by between 5% and 18%, hurting the competitiveness of
Malaysian companies. The rise of the dollar has sparked fears of a
devaluation from the ringgit's present peg at 3.80 to $1.
This uncertainty has manifested itself in the stockmarket, where the
Kuala Lumpur Composite Index has lost around 12% of its value since
the beginning of the year.
Will the government be forced to re-peg the ringgit? In a word, no.
Most analysts estimate the ringgit is only slightly overvalued now--by
around 7%, according to Khatina Norwawi, an economist with SG
Securities in Kuala Lumpur.
It also would complicate policy making and send the wrong signals to
the markets--a re-pegging of the ringgit at a revalued rate now would
imply the possibility of another in the future, should regional
currencies suffer another bout of revaluation.
Most importantly of all, the idea would be anathema to Premier
Mahathir Mohamad, the chief architect of capital controls. Such a
policy shift would be tacit admission that capital controls had
failed. "So long as he is prime minister, he will resist it as long as
possible," says an economist with a government-affiliated think-tank.
Even so, the debate illustrates the fragility of Malaysia's two-year
experiment with capital controls. If foreign-exchange reserves
continue to fall, and the yen continues to depreciate against the U.S.
dollar, analysts say that Malaysia will be forced to do something to
Right now, the government is hoping that the storm will blow over.
Many analysts expect the U.S. dollar to start losing steam by the
second half of the year following interest-rate cuts by the U.S.
Federal Reserve. These have served to narrow the gap between Malaysian
interest rates and those in the rest of the world, a factor which
could help stem capital flight. The interbank rate on three-month lending is now 3.3%, compared with a
peak of almost 9% before capital controls were introduced. Inflation
is expected to hover around 1.5% this year.
The interbank rate on three-month lending is now 3.3%, compared with a peak of almost 9% before capital controls were introduced. Inflation is expected to hover around 1.5% this year.
But the United States' uncertain economic direction has fuelled a
marked pessimism about economic growth prospects in Malaysia this
year. Now the consensus among private economists is that the Malaysian
economy will grow by 3%-4% in 2001, down from a prediction of 5%-6%
just six months ago.
Add to that a slumping stockmarket, commodity prices at three-year
lows and the prospect of widespread lay-offs, and it's no wonder that
many Malaysians feel depressed about the future. "I told my son if he
can get a job there, he should," says a 50-something civil servant
with a son studying in the U.S. "This country isn't out of the woods
The Far Eastern Economic Review
Linked to Success
By Lorien Holland
RUSTY CRANES AND HALF-BUILT office blocks still dominate much of Kuala
Lumpur's skyline, and are a sobering reminder of the crippling effects
of the Asian financial crisis. Three years on, the owners of A-grade
buildings still have trouble finding tenants, and the central bank
estimates that another four years will be needed to clear the glut.
But all this hasn't prevented a flurry of construction work on a
72-acre (28.8-hectare) "city-within-a-city" redevelopment project in
central Kuala Lumpur. While the shells of other buildings deteriorate
and scores of other projects have been kicked back to the drawing
board, Kuala Lumpur Sentral is rising, in spite of a series of
crisis-induced delays, on the site of an old railway marshalling yard.
Phase one, which is due for completion in 2004, involves 11 million
square feet of office, condominium and retail space. Interest in the
project is such that both Le Meridien and Hilton have already signed
up to manage the four- and five-star hotels on the site. According to
the developer, Malaysian Resources Corp. Bhd., about 80% of the units
in the first apartment block, Suasana Sentral, have been sold, while
three-quarters of the space in the first of the office towers, Plaza
Central 1A, also has been taken up.
The reason for this bubble of optimism around KL Sentral is
simple--the project is built around a new transport hub for Malaysia
that will involve national and city rail links. The focus of the
project is KL Sentral Station, which Malaysian Resources built for
nothing, in return for development rights to the rest of the site. The
station opened to passengers in mid-March, and an express rail link to
the airport will open next year. When that happens, KL Sentral will
also have a city check-in, like the one in Hong Kong, and is hoping to
attract significant numbers of international travellers.
"As the main transportation hub for Malaysia, KL Sentral is going to
be very convenient, so it has more to offer than other developments,"
says Malathi Thevendran, executive director of research and
consultancy at Jones Lang Wootton in Kuala Lumpur. She has been
involved in consultancy for the giant project and says the major
outstanding issue is creating a comprehensive management and marketing
team for the 5 billion ringgit ($1.3 billion) development.
"Most of the marketing is still done ad hoc and in-house. They still
need to get everything sorted out, but now that the station is open,
interest is rising and we expect the project to kick in at the end of
this year or the beginning of next year," she says. That's a view
echoed by local brokerage house OSK Research, which upgraded its
assessment of Malaysian Resources in early March because of the KL
Sentral project. It said the project was bucking bearish trends in the
construction sector and its location would enable it to command a
premium over other developments.
However, most foreign brokerage firms in Kuala Lumpur point to the
delays already experienced at KL Sentral--the railway station and
express rail link, for example, were initially scheduled to open in
1998--and competition with existing prime sites, like the 100-acre
Kuala Lumpur City Centre development that incorporates the Petronas
Mohaini Mohd Yusof, corporate communications director at Malaysian
Resources, discounts these fears, saying KL Sentral will complement,
not compete with, Kuala Lumpur City Centre as the two have different
roles in the city's property market. Restrictions imposed on foreign
property purchasers are expected to be relaxed later this year--a move
aimed at clearing the property glut--which is expected to work in KL
Sentral's favour. "Foreigners are most likely to be attracted by
rental yield and in this respect, high-rise condominiums, well-located
prime landed properties and office buildings are the likely choices,"
says Kuala Lumpur-based investment Web site Surf88.
In March, Malaysian Resources, which is well connected with Malaysia's
political establishment, also secured new financing for the next 10
years, through a 920 million ringgit issuance of Islamic bonds. That
should tide it through toward the end of the project, which is
scheduled for completion around 2012.
Meanwhile, the first tenants should be moving into the complex in
June, when temporary certificates of fitness are expected to be issued
for the first three completed towers. Malaysian Resources hopes that
250,000 people will be living and working in KL Sentral by 2010.