[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.
- Editor]

The Far Eastern Economic Review
Issue cover-dated 10th May 2001

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 officials.

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 maintain exports.

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.

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 yet."

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The Far Eastern Economic Review
Issue cover-dated 10th May 2001

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 Twin Towers.

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.

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