Capital control system

Capital control system

I would like to comment on the Jakarta Post article "Jakarta
should not copy Malaysia's capital controls" (Sept. 29) by Mr.
Eddy Soeparno -- AMEX's Corporate Finance Director, and would
like to suggest that current or future government should quickly
adopt Malaysia's style of capital control system for the
following reasons.

1. We are a very rich nation having a large resource base and
market.

2. We do not need short term U.S. dollar funds as our foreign
debts have been rescheduled.

3. Emerging markets have experienced the same problem and
liquidity movement (still undetected) leads to a sudden contagion
effect.

4. Diversifying foreign currency financing in the future and
reducing dependency on an overseas bail out.

Greater export volume and value, higher FDI and more relaxed
regulation should be encouraged.

6. IMF fund constraints due to lack of donors' support and
unclear policy which prolong and widen the crisis to other
sectors which originated from financial sector.

7. Excess liquidity in Europe and USA leads to further search
for higher yield in Southeast Asia.

By implementing such controls the government can resist the
pressures from U.S. dollar holders, put another pressure on U.S.
dollar creditors as well as kick out the U.S. dollar speculators.

I hope more contributions will come from experts to support
these ideas.

IRWAN IBRAHIM

Jakarta