Mahathir warns of 'anarchic' market

Mahathir warns of 'anarchic' market

Agence France-Presse, Kuala Lumpur

Malaysian Prime Minister Mahathir Mohamad warned Monday that free capital flow would lead to an "anarchic" globalized market and called for all countries to be allowed to impose their own forms of control.

"There is no reason to believe that the market will not become anarchic, and the strong will not oppress the weak, if the market is left unregulated.

"Level playing fields notwithstanding, everyone knows that the big and the rich will dominate a globalized free market," the premier said.

Mahathir, who is also Malaysia's finance minister, said many developing countries were not given an equal opportunity to voice their opinions on regulating capital flow as a means of protecting their markets.

"In the World Trade Organization conference, for example, people are brow-beaten by countries which have very strong delegations and very powerful influence over other countries.

"So it is not fair negotiations. Negotiations should be fair, and everybody should be given a hearing," he told reporters on the sidelines of a regional conference of the Union Network International-Asia and Pacific Regional Organization.

Mahathir said in his speech that Malaysia embraced the arrival of globalization, but rejected its present interpretation as being exclusively confined to unregulated cross-border capital flow.

"While free flow can mean the inflow of capital to the capital-poor countries, it can also mean -- and this we have learnt through painful experience -- an outflow of the invested capital," he said.

"We need to regulate because when you pull out, countries which were growing are now unable to recover."

The 76-year-old premier said Malaysia "suffered greatly" during the 1997-1998 Asian financial crisis when foreign investors pulled capital out of the country.

He said although Malaysia's government managed to stabilize the economy by adopting selective capital controls in 1998 and pegging its ringgit currency at 3.80 to the dollar, different countries needed different strategies to resolve their own financial problems.

"It's not so easy to say that merely by pegging the currency it will solve the problem.

"There are lots of other things that need be done so countries should be given the chance to give their opinions."

Mahathir, who on Sunday projected Malaysia's economic growth could exceed four percent this year, told reporters his optimism was fueled by positive signs of a recovering economy.

"Many experts have said it should be 6.0 percent growth... we see a lot of business activities in Malaysia, we see a lot of tourists coming into Malaysia," he said, adding some 1.2 million tourists visited in March.

"So, it looks like there is a curve going up," he said.

Mahathir had previously said the economy was expected to grow by three percent this year while the central bank said it would be 3.5 percent.