Pak Lah / Tun Dr Mahathir

Oh My God is this PM stupid

Before reading the piece below (courtesy of MekYam), I often wondered whether our current PM lacks intelligence and determination. I often thought that his stupified look actually hides some cunning intelligence in that head of his. But OH MY GOD IS THIS PM REALLY STUPID! Makes me reminiscing the good old days…

THE FINANCIAL CRISIS OF 1997 – 1998
By Nor Mohamed Yakcop

A moment comes, which rarely comes in a lifetime, when a particular event redefines a person’s life and changes the course permanently. For me, the meeting with Dr. Mahathir Mohamad in Buenos Aires (Argentina) on the evening of October 3, 1997 was such an event. It enabled me to devote the next 6 years of my life working for Dr. Mahathir Mohamad, meeting him almost daily. In the process, it enabled me to see, at very close range, the abilities of this great man.

The combination of many noble qualities in one person is rare, and it is this unique combination that has enabled Dr. Mahathir Mohamad to transform Malaysia from an otherwise typical third world country into a thriving and vibrant nation, well on the way to become a developed nation. It is also this combination of qualities that enabled Dr. Mahathir Mohamad to save Malaysia from becoming another IMF nation during the financial crisis of 1997 – 1998.

I am often asked about my involvement in the recovery plan implemented on September 1, 1998. It began on September 29, 1997, when I received a telephone call from the office of Dr Mahathir Mohamad informing me that the Prime Minister wanted to see me. The PM was in Cuba at that time, and I asked (in jest) if I was to meet the Prime Minister in Cuba !
I was told (not in jest) that he will be arriving in Buenos Aires on October 3, 1997 and I was to make sure I was in Buenos Aires at least a day before he arrived. I packed my bags and left for Buenos Aires, and arrived in Buenos Aires on October 2.

The PM arrived the following day at 5 pm and we met immediately at his suite. He informed me that he had asked many people to explain to him what was causing the financial crisis but no one was able to give him a satisfactory reply. He asked me whether I could explain to him what exactly was happening.

I asked him how much time he had, and he said two hours. I explained to him how the forex market works, about short positions and long positions, about hedging and how currencies are borrowed and sold, the difference between “bid” and “offer” and how funds can be transferred from one country to another at the click of a button. I also explained how the equity market works and the relationship between the forex market and the equity market. Dr. Mahathir hardly said anything, asked one or two questions, and listened intently.

After two hours, he had to end the meeting to get ready to go for an official dinner. He asked me about my plans for the night and I said I had been invited for the same dinner. Dr. Mahathir said to me: You go back to your room and write down all that you have been telling me for the last two hours, and see me at 7 am tomorrow. I went back to my room, skipped dinner, and wrote it all down, finishing at about 6 am.

I saw him the next morning at 7 am and gave him the report. He asked me to take a rest and come back again at 2 pm. When I returned, he told me that he had read the report and that he now understands what was happening in the financial markets. We started discussing various methods of overcoming the crisis, and our discussions continued when we returned to Malaysia. I met him almost daily for discussion, sometimes at his house and sometimes at his office. We tried a few mechanisms to overcome the crisis, some of which worked initially, but the hedge funds were so strong that it was difficult to proceed successfully with these mechanisms.

In early 1998, Dr. Mahathir Mohamad asked me to explore the idea of imposing an exchange control regime to overcome the crisis. I remember preparing voluminous notes on this subject. Dr. Mahathir went through the notes carefully, and kept asking for more and more details. We went through many rounds of discussion, until he was finally convinced both with the concept as well as the proposed mechanism. The rest, I guess, is history.

Dr. Mahathir also asked me to prepare a paper on how to put an end to Malaysian shares traded in CLOB (Central Limit Order Book) in Singapore. Dr. Mahathir was of the view that an important reason for the falling stock market was the short-selling of Malaysian stocks in CLOB. I prepared the report and Dr. Mahathir understood, for the first time, how exactly CLOB operates. The report, which was also implemented on September 1, 1998, put to an end the trading of Malaysian shares in CLOB.

I should add that the exchange control measures were crafted in such a way as to minimize the control aspects and maximize the outcome. The Prime Minister went through the proposed mechanism many times to make sure that the control elements were as few as possible, but adequate enough to ensure a positive outcome. There were no bureaucratic elements in these measures, such as requiring importers to obtain Bank Negara’s permission to import. The Ringgit was also pegged at a level where it was not overvalued. In almost every other country, which imposes exchange control measures and pegs its currency, there would, almost by definition, be numerous bureaucratic controls, and the currency would also be pegged at an overvalued rate.

It is often assumed that the system of exchange control (including fixed exchange rate) that we implemented on September 1, 1998 saved the country. The measures of September 1, 1998 were undoubtedly a necessary condition, but it was not a sufficient condition to overcome the crisis. Malaysia was saved, not by exchange control measures per se, but by Dr. Mahathir Mohamad.

Let me explain. Any other developing country, facing a similar crisis, if it had introduced the measures that we introduced in September 1998, the measures would probably have failed. The fact that in Malaysia these measures succeeded is due to the ability and character of Dr. Mahathir Mohamad. The economy and the financial system, under Dr. Mahathir’s leadership, was in a very healthy state–healthy enough for the exchange control measures to be implemented without negative consequences. Moreover, the Prime Minister’s hands-on management style enabled quick and timely decisions to be made, which was vital under the new exchange control regime.

Dr. Mahathir, as Prime Minister, had ensured that the Malaysian economy was fundamentally strong. Ringgit was strong and stable. On the back of the currency stability (at RM2.50 against the US dollar) Malaysia was doing very well. At the end of 1996, real Gross Domestic Product (GDP) grew at almost 8.5 per cent and the growth was expected to continue for many more years. The government was enjoying a fiscal surplus. The external debt was low, at 40 per cent of the Gross National Product (GNP). The current account of the balance of payments had narrowed from a deficit of 10 per cent to 5 per cent of GNP, and was expected to improve further. Inflation was at its lowest at 2.1 percent. We had steady growth of over 8 per cent for a major part of that period. And this fundamental strength of Malaysia was a critical factor that enabled the exchange control measures to succeed.

For a period of more than a year after the measures of September 1, 1998 were implemented, the Prime Minister met with a small group of us everyday – 6 days a week – for at least 2 hours to go through various economic data, including data on loan growth, exports, imports, property overhang etc. This enabled the Prime Minister to take quick actions, whenever required. I remember one morning when we were going through the property figures, he looked at me and directed that I should organize a property fair to clear the overhang of properties. I did, and property worth more than RM 3 billion was sold. Even after the crisis was over, Dr. Mahathir continued to meet with the group regularly, though no longer on a daily basis. And Dr. Mahathir continued to go through all the economic data with a sharp pencil.

No other Prime Minister in the world, either in developed or developing countries, employs such a hands-on approach in managing the economy. We can see, therefore, that it was not the exchange control measures per se that saved the country but the man — Dr. Mahathir Mohamad — himself.

The period 1997 – 1998 was, to paraphrase Charles Dickens, the worst of times, but it was also the best of times. The worst conditions brought out the best in Dr. Mahathir Mohamad. There is a saying that a good leader is like good tea – you only know the true quality when he is in hot water !

Throughout the crisis, the Prime Minister was focussed on resolving the crisis. Day and night, he thought of nothing else but the crisis. He read all he could on finance; he kept asking me to prepare notes on various technical issues. Sometimes he was sick with bad flu and cough, but he did not take time off to rest. He was convinced that he had to understand the issues before he could work out the solutions. His native intelligence and ability to focus on core issues were there throughout the crisis. He did not show any sign of fear even at the worst of time, only concern at the fast deteriorating state of the economy. He was, at all times, confident that he would prevail in the end.

I would like to add two additional points related to the financial crisis. The first is that, in implementing the measures of September 1, 1998, Dr. Mahathir not only saved Malaysia but the neighbouring countries as well. Let me explain. When Malaysia imposed its exchange control measures on September 1, 1998, the currency speculators realised that the other affected countries (Thailand, Indonesia and South Korea) could also impose similar controls, and they, therefore, stopped their activities in its track. The speculators backed off. They bought back the currencies that they had sold. This is resulted in the regional currencies appreciating. Moreover, the International Monetary Fund (IMF) was not happy with what Malaysia had done, particularly since, after implementing the measures, we did exactly the opposite of what the IMF wanted us to do, i.e. we lowered our interest rates and injected liquidity into the system. The IMF, therefore, started relaxing conditions in other countries and allowed them to lower their interest rates and allowed them to inject liquidity to stimulate their economies so that Malaysia would not outperform the IMF countries. Therefore, it is no exaggeration to say that Dr. Mahathir Mohamad not only saved Malaysia, but the other affected countries in the region as well – Thailand, Indonesia and South Korea.

My second point is regarding what would have happened if the exchange control measures were not implemented. If the measures were not implemented, many of corporations in Malaysia would have gone under, due to the high interest rates. When the corporations fall like dominos, banks would have faced severe liquidity and solvency problems due to the ballooning NPLs. The problems of the banks would have resulted in a credit squeeze, which would have led to another round of corporate failures. The Government’s revenue would have fallen drastically as fewer firms would be paying corporate taxes, thereby reducing the Government’s ability to stimulate the economy through fiscal policy measures. As a result of the problems faced by corporations and banks, unemployment would have increased substantially, leading to a second round of problems. This is the classic vicious cycle, which could have, in the end, destroyed the social and political stability of the country. This was a scenario that was waiting to happen. It did not happen because of the decisiveness and guts of Dr. Mahathir Mohamad, who decided to take the path less travelled.

We owe Dr. Mahathir much gratitude for what he has done for Malaysia over the last 22 years. Solving the financial crisis of 1997 – 1998 was just one, albeit perhaps the most important, of Dr. Mahathir Mohamad’s many contributions to the nation.

On a personal note, over the last 6 years, I have come to admire this great man for his abilities, his high moral values and, most of all, for his sincerity. Certainly, a man like Dr. Mahathir Mohamad is not born everyday.

(23rd. October, 2003)

33 thoughts on “Oh My God is this PM stupid

  1. JMD,

    It’s almost 3:00am where I am and I just came from CheDet’s blog. I have to marvel anew at how clearly he can articulate the most convoluted of concepts – in words that do not belittle the intelligence of little ppl like us.

    But reading the despairing laments of many fellow Malaysians in his comment box just breaks my heart. Apart from wondering about whether cunning intelligence lurks behind the PM Abdullah’s “stupified look” one has to wonder too if there is a shred of compassion there for the rakyat.

    JMD : He is also so bodoh sombong kan?

    Like

  2. concurred. he is stupid. i guess like that story where todak menyerang singapore and where the little boy ends up killed, i wondered who will be proxy to be killed.
    anyways, my thought that we will hate UMNO so much + BN that we go to the other parties, then the other parties makes a surprise come back to UMNO bringing back the old members and reform UMNO, and somebody who’ve tried to sell Malaysia back in 1998 will now become the PM and helped Pak Lah to sell more of Malaysian.
    then this stupid SIL will come in and save the day with the money SIL took and gave back to malaysian … and become the PM…
    then singapore got johor and colonialism again.

    Like

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  4. Kekadang ini ujian Allah… Dulu bila PM Tun Mahathir memerintah kata dia zalim, walhal, tak pernah pulak kerajaan zaman Tun naikkan harga minyak mengarut-ngarut… Ingat masa kegawatan ekonomi tahun 1997, langsung kerajaan tak naikkan harga minyak..

    Kini Allah uji kita pula dengan seorang lagi pemimpin yang katanya mencari Al-Ghazali dan As-Shafie… Tetapi lupa kepada rakyat, dan lupa untuk melihat keadaan orang-orang susah…
    Saya sungguh-sungguh tak paham apa yang berlaku kepada ekonomi negara sebenarnya… Kita tak pernah putus bekalan minyak.. Kenapa harga minyak perlu naik? Lainlah kalau bekalan minyak negara habis, maka perlulah naikkan harga minyak.. Atau kalau bekalan beras naik dan kena import masuk beras, perlulah beli beras dipasaran luar.. Kita ade minyak kat Malaysia, dan bekalan minyak masih mencukupi, kenala berkongsi susah dengan rakyat…

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  5. Akhirnya.. selain dari blog Che Det, this is one of the best blog.. that answers clearly… the man behind Malaysia’s success..

    I have posted your blog address to frens and folks, who has passion for economic crisis explanations..

    Thanks so much..

    P/S : Hope you could write more of such articles and save the rakyat from Pak Lah’s lullaby..

    Like

  6. The article by Nor Mohamed Yaacop is a very good first hand experience ever written on how our Tun managed the country during the crisis. The main points: Ask questions, understand the issues, read a lot, discuss a lot, work hard (day and night) (we’re talking about managing a country) and formulate a solution. AAB should read the article and after all, the writer is now our 2nd Finance Minister. AAB’s decision to increase the petrol price exorbitantly is very very hasty, done without much thinking and easy solution to ease the government burden. As a PM, these actions were irresponsible, unbecoming and of course stupid (bcoz any ordinary rakyat in the street can make such decision). As such, what for we have a PM?

    JMD : True. If we just change the word ‘currency speculation’ in that article to ‘commodity speculation/fuel forward contracts’, we should then see clearly that Pak Lah needs to broaden his study and analysis in order to get better solutions when overcoming the food shortage or the increase in oil price. He didn’t even create some sort of ‘National Action Council’ to find solutions. Brainstorming sessions were limited to only a few parties (ministries and 4th floor boys). Since we had anticipated 2006 that the rising prices will be a problem, then Pak Lah should have created these ‘councils’ and get advices from all sectors.

    In Mahathir’s time, he even pushed for reforms of the currency speculation among the G8 leaders! Did Pak Lah pushed for the reforms in commodity speculation in OIC? in G15? in G8? APEC? WEF in Davos? He didn’t. Because he is short sighted and failed to see the bigger picture. All his oxford graduates advisers failed to help him too.

    Hence, the current solutions were very painful and seen as a shortcut for some lease of life.

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  7. I am probably a clever mom..though not everyone agrees (especially my ex-husband), maybe a little bit clever in accounting and translation, but totally not clever in politics. Never bothered about it until recently..since whatever that’s happening is so..IN YOU FACE..and i would be totally blind not to care, and blind I am not. This post is totally interesting and informative..i wish I have someone to teach me about how the market works. I wonder if our current leaders take the trouble to learn what they do not know before making any sweeping statements.

    Mek Yam, I see you very active in the blogosphere, but never see your blog..sis..teringin la nak tengok your blog.

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  8. Pingback: The belated National Inflation Council « Jebat Must Die

  9. HACKED
    I was unable to read chedets and few other blog since yweterday. Can any one help me to solve this problem.

    PEMBAZIRAN CUM PROPAGANDA PAK LAH

    21/6/08
    JASA mengarahkan semua ketua cawangan umno seluruh johor berhimpun di KL
    sebelah malamnya satu konsert akan diadakan di PWTC yang akan dihadiri olEh Pak Lah dan semua ketua cawangan umno seluruh johor

    penginapan lima bintang disediakan ( legend and other hotels)

    22/6/08
    Taklimat oleh Pak Lah kepada semua ketua umno cawangan seluruh johor

    kos diberitakan RM10 juta

    Bolehkah ahli-ahli umno semua berikan komen tentang ini?????

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  10. I was extremely touched reading the writings by TS Nor,not realising that my tears falling…what a noble person is our TDM. This is a real PM, taking care of the country and the people. No one could ever replace him as our Visionary PM. He remains my best Malaysian IDOL.

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  11. thanks for the article… revealing what really happens that saves us during the crisis…he’s (TDM) a real saver…i surely do not know what will happen to our country if we proceed with certain partiec approach to have the IMF” mechanism…

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  12. Bro, ko ni jahat la coz buat aku ngalir airmata baca artikel TS Nor tu.. TDM adalah contoh pemimpin Malaysia yang sangat bijak, teliti dan berpandangan jauh tapi sayang, pemimpin kita sekarang ini tidak dapat menandingi sifat2 TDM tersebut walaupun hanya 0.1%!!

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  13. People make joke of Pak Lah stupidity and his family 69… Islam Hadhari…Married with Muallaf or mix blood… May we pray to have a genius person like Tun.

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  14. well the fact they just concern their own pocket.
    what ever action taken 50% must go to them first.

    cogan kata paklah

    BERKERJA BERSAMA SAYA… BANTU BINA KEKAYAAN SAYA
    ISLAM HADARI… RAKYAT HIDUP SEDERHANA, PEMIMPIN KAYA RAYA!!!!

    Like

  15. I LOVE TUN DR MAHATHIR MOHAMAD AND THANK YOU JMD FOR THE BEAUTIFUL ARTICLE, I HAVE COPIED THE ARTICLE AND EMAIL TO ALL MY FRIENDS……THANKS AGAIN SIR, LETS FIGHT TOGETHER WITH TUN TO SAVE OUR MALAYSIA……

    JMD : You should thank TS Nor for the lovely written article. I’m sure TS Nor is delighted that most Malaysians feel the same way like he does.

    Like

  16. sejak dari dulu lagi masa tdm lantik aab i dah tak suka kan aab,tak setuju , ragu-ragu keupayaannya,walaupun kawan kawan di sekeliling memuji aab sebagai mr clean i tetap tak suka..sekarang terbukti betol seperti yang i was waskan..fuh nasib baik aku tak suka aab dari dulu. tdm bagi dia atas dulang mas tau waktu peralihan kuasa..dasar otak beku ,,,ego mana da aab nak mengadap tdm minta pandangan…tak reti guna kemudahan yg telah ada. gara-gara pelakon handalan ini lah kita semua merana…kompom kakitangan kerajaan tak dapat bonus ujung tahun nie…ni lagi buat aku meluat…sudah susah..lagi susah. letak la jawatan cpat aab…dah lepas jawatan pm pelok jer bini ko siang malam abeh cerita ko senang kami semua pun senang…..

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  17. Semoga Allah memberikan kesihatan dan kekuatan kepada TDM untuk terus memberikan pandangan dan buah fikiran buat rakyat Malaysia.

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  18. sedih sgt baca. nak nangis, uwaaaa. pm skrg ada ke lg pangil TS Nor utk tanya pasal malaysian economy? nmpak mcm tak de peranan pun

    Like

  19. Thank you for the article. Pls ask someone to translate in distribute to kampung people. Rakyat must know this..

    PENGUMUMAN,

    Saya telah berjaya membawa usul supaya jawatan Presiden & Timbalan Presiden UMNO dipertandingkan pada Mesy Agung Cawangan Changkat, Nibong Tebal, Pulau Pinang pada 27hb Julai 2008. (Saya mendapat majoriti 82% setelah saya memberi penjelasan kenapa peralihan pucuk pimpinan perlu diadakan segera). Sebenarnya ahli-ahli UMNO diperingkat akar umbi perlukan penjelasan…. Lets work on it…

    Like

  20. hye..this is my first time here..and the writing buat air mate saye menitik..time kasih TDM..for being such a great man for the country..

    JMD : Thank you and welcome to this blog.

    Like

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  22. This article has made people open their eyes what had hapened during 1997-1998 economic crisis. I believe what we are facing now is worst than 1997 crisis, congrtulation to all of us in contributing choosed present leaders today. Wheather we like it or not we are the one to be blame.My advice stop blaming others focus in our future & conrtibute as much as we can to change our top leaders in UMNO if possible. JMD has shown us which direction our present leaders is heading us to same goes to chedet.com & sakmongkolak47.blogspot.com. We wont get such information from our mainstrem media. I am glad that all of us has this opportunity to say out what we belief. Remember what Lee Kuan Tew said ” Action Speaks Louder Than Words”, maybe it is something we can think of. Before we make any move ask ourselves “How much we have contributed to the society, to the country and to our surrounding”. Because this might carried weight on what ever action we are going to take to save this country. Most of our society knows very well the verse “Cakap Tak Serupa Sama Bikin”. I wish all of us think wisely. I can see most of the bloggers belong to this category, some are even worst they dont even know what they are talking about & some from hear say. As a Malaysian filterize all information, remember we are in a multi racial country we need to be alert on sensitive issues, we are still consider in a quite resonable democratic country so there are a lot can be done in the next general election do something to save this country & our next generation and last & for most blame yourself what ever is happening, all of us contributed apart to what is happening.

    JMD : Thank you for the comment

    Like

  23. Darne, that old guy really is good. The power was with the right people back then. This article by Mr. Nor also reflected his wisdom. No hanky panky, no bullshi**ing around the bush. I pray that in the near future, a leader like Mahathir will step up and lead us. Felt so stupid as a Malaysian if the leaders did not reflect the people fully or correctly as they should do. Also hoping that by the time that leader be in power, the damage was minimal.

    Like

  24. Eventhough most of you called him stupido, but I think the person who select him as Minister, as Deputy in back the 90’s until 2004’s G.E. and finaly handed him to succeeded the ‘Great Man of Malaysia’ is the most stupid in entire universe. You just cannot simply controlling person to do this and that. If Tun doesn’t believing him to head Malaysia, then he should not appointing him. Why he done that? Is it just because his current deputy are not enough experience? Or just to show to people Tun’s power ruling Malaysia still continous. I do support Tun and all UMNO’s fighter for Malaysia’s future especially Malays right to self-belonging in his owns soil? I most prefer DSAI should be vanish either in Malaysia or else?? But, despite all this, Tun have criticising from Tunku’s management until Malaysia’s current PM and putting himself for the longest Malaysia’s PM, making Malaysia his own privacy.

    JMD :🙂🙂 Kita tidak boleh menyalahkan Tun di dalam hal ini. Beliau tidak mungkin dapat melihat kehadapan. Pak Lah, semasa menjadi naib presiden dan juga menteri luar telah menjalankan tugas dengan agak baik. Perilaku yang baik, seorang yang beragama (cucu kepada ulama dan anak kepada timbalan ketua menteri Pulau Pinang) dan perwatakannya lembut. Tugas Pak Lah apabila menjadi Perdana Menteri amat mudah sekali. Beliau hanya perlu meneruskan dasar dasar negara yang telah digariskan kearah Wawasan 2020. Akan tetapi, akibat dari nasihat nasihat dari ‘pakar-pakar’ disekelilingnya, perjalanan Malaysia menjadi tidak menentu. Sila baca lagi artikel artikel saya dan komen komen sampingan ya. Terima kasih.

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  25. Semua komen kata semua tak betul, habis apa yang betul??? Kalau tak boleh tahan rasa bawa kereta terjun gaung lebih baik daripada memendam rasa…barulah semua betul….

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