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