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."