Malaysia demands rules to rein in speculators

Malaysia demands rules to rein in speculators

HONG KONG (AFP): Malaysia will not sign a global pact freeing up the financial services sector unless rules are put in place to rein in speculators, Deputy Prime Minister Anwar Ibrahim said yesterday.

Malaysia will join the pact, being negotiated under the umbrella of the World Trade Organization (WTO), "only on condition that there are effective guidelines, mechanisms to protect emerging economies from unscrupulous speculators," Anwar said.

The WTO is facing a December deadline to wrap up the deal which would liberalize the world's banking, insurance and fund management industries. Western countries are pressing Asian counterparts to ensure the deal is reached.

Asked if he thought it was still possible to conclude the agreement by the deadline, Anwar said: "There is a possibility if the arrangements are made now to ensure adequate protection for emerging economies."

"Because you cannot expect us to surrender at this juncture seeing what has happened in Thailand and the contagion effect to the region," Anwar told reporters on the sidelines of annual global talks.

Southeast Asian currency markets have been swept by a wave of speculative attacks since Thailand floated its currency, the baht, on July 2 in a move which has slashed its value against the dollar by more than a third.

The Malaysian ringgit, the Indonesian rupiah and the Philippine peso have all hit record lows in recent weeks while regional stock indices have dived.

Anwar has suggested that the International Monetary Fund (IMF) devise rules to rein in hedge funds and investment houses he described as "financial gunslingers."

He said in Bangkok on Friday that developing countries could not afford to liberalize their financial sectors without defense mechanisms being put in place to ward off future attacks.

Prime Minister Mahathir Mohamad suggested here Saturday that the turmoil in financial markets could prompt Malaysia to review its liberalization.

Anwar said the remarks related not to steps already taken to free up the financial services sector, but "the future negotiations in the WTO," although the Malaysian government in principle was committed to liberalization.

He said Malaysian officials negotiating the pact in Geneva had been instructed to "proceed, be very positive, make sure that our position is clear, that we are committed to a few additional measures for liberalization but it is also conditional on measures to protect emerging economies, markets in particular."

The deputy premier, who is also finance minister, said he was still hopeful that an accord would be reached because "there is no alternative to liberalization."

Anwar said he would press his case at the International Monetary Fund-World Bank annual meetings here this week.

He also said he would urge the IMF to launch a study on the "adverse negative implications due to excessive speculations" in currencies.

Anwar clarified that there were no changes in his country's currency trading rules, moving to contain potential damaging fallout on financial markets of Mahathir's comments that currency trading should be outlawed.

Mahathir suggested in published remarks that Kuala Lumpur could ban currency trading which he described as "immoral" in a speech here Saturday.

"There is absolutely no chance in so far as the rules and regulations regarding foreign exchange trading in Malaysia (are concerned)," Anwar told reporters after talking with Mahathir on .

Anwar said he was asking the IMF to undertake a study on Mahathir's suggestion and to introduce measures "when and if necessary."