Mahathir sees 'moderate' recovery within a year<\/p>\n
KUALA LUMPUR (AFP): Prime Minister Mahathir Mohamad said
\nyesterday that the battered Malaysian currency should return to
\n"moderate" levels in six to 12 months if people cooperate by
\ntightening their belts.<\/p>\n
"Our actions are important to help the economy recover. We
\nshould have confidence and trust in our economy and our
\ncurrency," he told a morning chat show broadcast by Sistem
\nTelevisyen Malaysia (TV3).<\/p>\n
"We should not buy imported goods and we should boost savings
\nand have trust in our banks," he said. "If we do this, I am
\nconfident that we can recover -- not to the original levels but
\nto moderate levels which are adequate for us -- maybe within a
\nperiod of six months or a year."<\/p>\n
Asked how long the country's economic crisis would last,
\nMahathir said: "It is difficult to determine as long as they
\ncontinue to sell our currency."<\/p>\n
During the 80-minute interview, which largely focussed on how
\nMalaysian housewives should deal with the economic crisis,
\nMahathir assured the nation that the central bank had adequate
\nforeign reserves.<\/p>\n
"Bank Negara has sufficient reserves as we do not expose much
\nof our funds nor are we involved in excessive dollar selling to
\nprotect the ringgit," he said. "We have sufficient reserves to
\nsupport all the country's needs."<\/p>\n
The central bank announced Thursday that Malaysia's foreign
\nreserves fell to 59.1 billion ringgit (US$21.7 billion) at the
\nend of December, down from 59.8 billion ringgit in mid-December.<\/p>\n
Reserves are expected to decline further following recent
\ncentral bank intervention to support the ringgit, which plunged
\nto a series of all-time lows earlier this week before the bank
\nintervened.<\/p>\n
Mahathir said recent moves to merge Malaysian financial
\ninstitutions were aimed at creating bigger entities capable of
\ncompeting with foreign banks.<\/p>\n
He noted that smaller institutions had previously been
\nreluctant to merge out of fear of losing their independence. "But
\nthe fact is they are weak and cannot play a role in such critical
\ntimes," he said.<\/p>\n
Asked why Malaysia has not sought assistance from the
\nInternational Monetary Fund (IMF), Mahathir said such a move
\nwould only "expose us to economic colonization" by foreigners.<\/p>\n
"The problem is that if we resort to foreign borrowings, this
\nmeans that our economy is weak and we need to depend on other
\npeople who could then exert pressure on us," he said, adding that
\nMalaysians should instead save more.<\/p>\n
"If we were not stable, we would have asked for IMF assistance
\na long time ago. But we are still able to defend our economy
\ncompared to other countries."<\/p>\n
The Malaysian leader admitted that regional currency turmoil
\nwas "beyond our control" and called for denominating an increased
\nshare of trade between Southeast Asian nations in their own
\ncurrencies rather than the dollar.<\/p>\n
He said Malaysia would specifically seek bilateral payment
\narrangements with other members of the Association of Southeast
\nAsian Nations (ASEAN). "Trade with ASEAN members can be done in
\nour own currencies," he said.<\/p>\n
Other members of ASEAN are Brunei, Myanmar, Indonesia, Laos,
\nthe Philippines, Singapore, Thailand and Vietnam.<\/p>\n
Mahathir said the labor market was still tight with the
\ncountry relying on an estimated two million foreign workers.<\/p>",
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