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BTS: Why Daim Left - Dwindling Reserve
By Eddie Toh
13/6/2001 4:18 am Wed
[Mahathir menafikan hubungan beliau dengan Daim adalah renggang.
Daim dikatakan berhenti kerana merasa tidak dihargai serta tidak
senang dengan tohmahan yang dilemparkan kepada beliau. Mahathir
juga menafikan khabar angin kediaman Daim telah digelidah oleh
pihak berkuasa sebagaimana yang terlapur merata. Walaupun begitu
sikap Mahathir mencampuri urusan tugas Daim beberapa kali menggambarkan
ada sesuatu yang tidak kena sehingga Daim yang diam itu berkata-kata.
Sudah tentu kerana sakit sudah tidak tertahan dirasa.
Lapuran BTS yang kedua telah mendedahkan sesuatu yang harus dipandang
berat. Rezab negara telah susut dari US$34 bilion kepada US$25 bilion.
Ini bersamaan dengan ketahanan 3.8 bulan impot = hanya lebih sedikit
sahaja dari paras kritikal antarabangsa sebanyak 3 bulan. Kata orang
tua-tua paras air sekarang sudah ditahap tengkok. Entah besuk lusa ia
akan mencecah paras bahaya di atas kepala. Jika ini berlaku akan menggelabahlah
semua dan banyak pihak akan merana kerana terpaksa dikorbankan jua.
Menurut Dr Ariff dari MIER, Rezab Malaysia bukan sahaja amat rendah
berbanding piawai sendiri sebanyak 5-6 bulan impot bertahan, malah ia
sudah seperti nazak jika dibandingkan dengan Singapura (12.3 bulan),
Taiwan (9.6 bulan), Indonesia (6.1 bulan) dan Thailand (5.7 bulan).
The Business Times, Singapore
PM dismisses lingering talk of rift between them
By Eddie Toh
MALAYSIAN Prime Minister Mahathir Mohamad has disclosed that his
former economic adviser Daim Zainuddin quit earlier this month because
he felt unappreciated, but he dismissed lingering talk of a rift
'There is no rift. It was a friendly parting. He felt that some people
didn't quite appreciate what he was doing and he thought that it was
time for him to leave the government,' the premier told reporters
yesterday after launching a book on Malaysian oil major, Petronas.
He added: 'I'm still very friendly with him.'
When asked to comment on rumours that Mr Daim's residence had been
raided by the authorities, the premier said: 'Not true. Not that I
know of. I don't know anything about that.'
Dr Mahathir did not elaborate on why Mr Daim felt unappreciated, but
according to analysts, the former finance minister may have felt
slighted by the barrage of criticisms against some of his decisions
despite his success in turning the Malaysian economy around.
One of his most controversial decisions was the re-nationalisation of
Malaysia Airlines this year.
Critics said the finance ministry should not have paid such a high
price to buy a substantial block of the national airline from Tajudin
Ramli, a protege of Mr Daim.
The price tag was RM1.79 billion (S$853.8 million) or RM8 a share -
slightly below Mr Tajudin's cost of RM8.70 but more than double the
debt-laden carrier's net tangible assets.
On June 1, Mr Daim resigned all his official posts - finance minister,
minister of special functions, executive director of the National
Economic Action Council and treasurer of the dominant political party,
United Malays National Organisation. No reason was given. Dr Mahathir
has temporarily taken over all the posts.
The premier yesterday declined to indicate his choice for the two
powerful seats vacated by Mr Daim - finance minister and Umno
When asked what would be the prerequisites of the new finance
minister, Dr Mahathir said: 'He must be clean and not a controversial
figure.' He declined to say if he will announce the appointments
during the annual convention of Umno on June 21.
'I don't want to be hurried on this. I will have to report Umno's
finances to the general assembly. For this, I will seek the help of
Like his brief stint as finance minister following the sacking of
Anwar Ibrahim in September 1998, Dr Mahathir is not expected to head
the finance ministry for too long.
'I'm still working out how to operate because the work of a prime
minister is very heavy and the work of the finance minister is also
very heavy,' he said yesterday.
The Business Times, Singapore
Ringgit pressure revives call for peg to currency basket
Fixed rate to US$ leaves little room for flexibility, analysts say
By Eddie Toh
THE continued pressure on the ringgit has led to renewed calls for
Malaysia to adopt Singapore's approach in controlling its currency
within a band based on a trade-weighted basket of currencies, instead
of fixing the ringgit against the greenback.
'This will allow it more flexibility and less strain on domestic
prices and competitiveness should regional currencies move adversely
from current levels,' said SG Securities in a report.
But Khatina Nawawi, one of the authors of the SG report, argued that
it was still too early to tinker with the Malaysian currency peg,
fixed at the height of the regional financial crisis in September
1998. 'We don't see it's time for the ringgit peg to change,' she
But in the event of a devaluation by the government, SG Securities
reckoned that the Malaysian government may fix it at between RM4.10
and RM4.30 against the greenback by the middle of next year against
the current level of RM3.80.
Similarly, Song Seng Wun, regional economist at GK Goh in Singapore,
argued that a trade-weighted peg will be less disruptive.
'The trade-weighted system provides a better alternative. A break of
the fixed exchange rate system will be disruptive. They may have no
choice but to devalue the ringgit if the outflow continues,' he said.
They were reacting to comments by Mohamed Ariff, executive director of
the independent think-tank, Malaysian Institute of Economic Research,
who had argued for a switch to a floating peg based on a basket of
currencies of Malaysia's trading partners.
'A transparent basket peg would appear to be a better option than a
single currency peg, as it would provide exchange rate stability
against a basket of currencies, without exchange rates rigidity
against any one currency,' he wrote in the New Straits Times over the
The idea of the managed band system is not something extraordinary.
The National Economic Action Council had initially proposed the idea
as one way to help stabilise the gyrating Malaysian currency during
the regional economic crisis.
But Malaysian Prime Minister Mahathir Mohamad eventually opted to fix
it at RM3.80 against the US dollar to ensure maximum stability and
The control held off currency speculators and enabled the government
to pursue an expansionary fiscal policy and keep interest rates soft.
However, the ringgit has come under pressure lately due to perceptions
that it is overvalued against regional currencies.
'The relative strength of the ringgit now vis-a-vis the Thai baht,
Indonesian rupiah, Philippine peso and Singapore dollar far exceeds
that of the pre-crisis early July 1997 situation. In other words, the
ringgit has moved clearly out of sync with the rest of the regional
currencies,' said Dr Ariff. Confidence in the currency has also been
shaken by the dwindling reserves.
The country's reserves have fallen from US$34 billion to about US$25
billion, which is enough to sustain 3.8 months of retained imports -
just slightly above the internationally accepted financially prudent
level of three months. Dr Ariff said Malaysia's reserves are low, not only by the country's
own standards of six to seven months of retained imports, but also in
comparison with Singapore's 12.3 months, Taiwan's 9.6, Indonesia's 6.1
and Thailand's 5.7. 'Much will hinge critically on the external
reserves,' he added.
Dr Ariff said Malaysia's reserves are low, not only by the country's own standards of six to seven months of retained imports, but also in comparison with Singapore's 12.3 months, Taiwan's 9.6, Indonesia's 6.1 and Thailand's 5.7. 'Much will hinge critically on the external reserves,' he added.