KL's leaders keep investors guessing<\/p>\n
By Nelson Graves<\/p>\n
KUALA LUMPUR (Reuters): Will it be guerrilla warfare? Or the
\nwelcome mat?<\/p>\n
On the same day last week that Malaysia's prime minister
\npredicted a \"guerrilla war\" against foreign capitalists, his
\nsecond in command was appealing to overseas investors for
\nbillions of dollars.<\/p>\n
The conflicting messages from Prime Minister Mahathir Mohamad
\nand Deputy Prime Minister Anwar Ibrahim have many scratching
\ntheir heads.<\/p>\n
\"Foreign investors are concerned because there is no
\nconsistent message,\" a Western diplomat said.<\/p>\n
\"It is no good for Mahathir and Anwar to continue to send
\ndifferent and completely contradictory messages to investors and
\npeople of the world,\" opposition leader Lim Kit Siang told
\nReuters.<\/p>\n
The contradictions are not lost on the financial markets,
\nwhere the ringgit and share prices went into retreat last week
\namid confusion over Malaysia's economic policy.<\/p>\n
Mahathir has been openly pressing for lower interest rates and
\nobliquely criticized the central bank's monetary policy. Anwar
\nhas defended the central bank and cautioned that capital could
\nrush overseas if rates were too low.<\/p>\n
The prime minister has kept up a drumbeat of criticism aimed
\nat foreign investors ever since Asia's financial troubles erupted
\nlast July.<\/p>\n
\"He's been consistent,\" said Abdul Razak Baginda, executive
\ndirector of the Malaysian Strategic Research Center, a think tank
\nin Kuala Lumpur.<\/p>\n
But Mahathir's rhetoric reached a new pitch last week when he
\nfulminated against foreign companies and currency traders who he
\nsaid were bent on gaining control of Asian economies.<\/p>\n
\"But the people will show their resentment against those
\noutsiders who will lord it over them once again,\" he said in a
\nspeech in Tokyo.<\/p>\n
\"Even if they want to avoid violence, violence must come as
\nthe new capitalists disregard the signs. There will be no war of
\nindependence of course. But there will be a kind of guerrilla war
\nwhich will not be good for anyone.\"<\/p>\n
Hours later, Anwar, who is also finance minister, announced
\nthat a government-backed agency would be looking to foreign
\ninvestors to buy up to US$2 billion worth of bonds to fund the
\npurchase of bad loans from banks.<\/p>\n
The agency, the Asset Management Company, is being advised by
\ntwo U.S. stalwarts, J.P. Morgan and Arthur Andersen.<\/p>\n
Despite the contradictions, Mahathir and Anwar display no open
\nhostility and appear comfortable in their roles of senior
\npolitical statesman and heir apparent holding the financial
\nportfolio.<\/p>\n
Many foreign investors have grown accustomed to the discordant
\nmessages, discounting much of Mahathir's rhetoric as political
\nboilerplate.<\/p>\n
After all, during 17 years in power Mahathir has doggedly
\npursued a liberal, capitalist agenda that has propelled
\nMalaysia's economy forward.<\/p>\n
\"But he is a very sensitive individual who feels personally
\nhurt by the damage that last year's events have had on Malaysia's
\neconomy,\" said a senior Malaysian financier, seeking to explain
\nMahathir's acerbic tone.<\/p>\n
Still, some are beginning to wonder how much longer the two
\nleaders can deliver such starkly different messages.<\/p>\n
\"It's becoming more public now,\" the Western diplomat said.<\/p>\n
\"There is a growing rift between them, and Anwar is flexing
\nhis muscles.\"<\/p>\n
\"Mahathir's anti-West ideas don't go down well at all at this
\ntime,\" Abdul Razak Baginda said. \"His rhetoric has an economic
\ncost which we cannot bear.\"<\/p>\n
But diplomats said Mahathir was right when he said foreign
\ninvestors, while reluctant to take a gamble on shares or the
\nringgit, continue to be interested in investing in projects.<\/p>\n
\"There is a lack of transparency which, coupled with the
\ninconsistent messages, has investors saying, 'Is this the place
\nwhere I want to park billions of dollars?'\" the Western diplomat
\nsaid.<\/p>\n
\"But there is no sign of foreign direct investment dropping
\noff. Companies are still coming and talking.\"<\/p>",
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