DR ARIFF (MIER) SANGKAL TEORI EKONOMI MAHATHIR
 
Perang pilihanraya sudah bermula.  Mahathir telah pun mengaku kalah dalam isu Anwar.   Dia tahu BN tidak boleh menang pilihanraya dengan terus memfitnah Anwar dalam kes liwat kerana rakyat tidak lagi termakan dongengan beliau serta para tukang karut di sekeliling beliau.

Maka manifestonya kini beralih kepada dua kisah dongeng lain,  iaitu:-

1. Cerita KHURAFAT bahawa hanya BN sahaja yang boleh memerintah
2. Kisah TAHYUL mengenai pemulihan ekonomi (sic) yang kononnya di'mastermind'kan oleh Mahathir.

Untuk kali ini saya ingin membawa pembaca kepada kisah TAHYUL berkaitan dengan 'kepakaran' Mahathir menerajui pemulihan ekonomi (sic) Malaysia.  Tahukah pembaca bahawa Dr Mohamed Ariff, Ketua Pengarah Malaysian Institute
of Economic Research (MIER) telah menempelak Mahathir melalui satu rencana ekonomi yang disiarkan dalam akhbar The Star 20 Oktober 1999 bertajuk 'M'sian Controls Not Easily Replicable'?

 Tempelakan Dr Ariff menjadikan  'kepakaran' (baca: kebaculan) ekonomi Mahathir seperti yang diwar-warkan oleh media kroni BN sebagai tidak lebih daripada sampah sarap yang menyakitkan mata sahaja.   Apa kata Mahathir dan jawapan yang tersirat daripada rencana Dr Ariff?

1. Mahathir kata pendekatan Anwar pada peringkat awal kegawatan ekonomi telah merosakkan ekonomi Malaysia.  Lalu beliau pun memperkenalkan dasar kawalan modal dan matawang.   Kononnya dasar kawalan modal dan matawangnya itulah yang membawa Malaysia keluar daripada kemelesetan ekonomi.

Jawapan Dr Ariff:  'Had Malaysia imposed exchange and capital controls at the beginning of the crisis,  it might have been a DISASTER. Much would,  however, have depended on the ringgit-dollar peg.  The chances  are that the exchange rate of the ringgit would then have been fixed at a  much higher level arbitrarily,  closer to RM3.00 per US dollar which amount to a depreciation of about 20% from the pre-crisis RM2.50 benchmark.

At that rate and at that time,  the ringgit would have been grossly overvalued,  in which case it would have been EXTREMELY DIFFICULT for the  central bank to defend the peg,  as demand for the foreign exchange would  have outstripped supply.

Under this scenario,  a parallel market for foreign exchange would have emerged with all the attendant problems,  exports would have suffered, and investor confident would have been severely dented'.

Dalam ertikata lain,  pendekatan ekonomi Anwar di peringkat awal krisis telah memberikan kerajaan satu 'benchmark' tukaran asing pada RM3.80 bagi satu dollar Amerika.  Mahathir patut berterima kasih kepada Anwar kerana  membantunya menyediakan 'benchmark' tersebut.   Kalaulah tiada pendekatan awal menangani krisis a la Anwar,  serta dibiarkan pula Mahathir mengenakan peraturan kawalan modal dan matawangnya (pada analisa Dr Ariff, kemungkinan besarnya kadar pertukaran akan ditetapkan pada RM3 = USD1),  hari ini  Malaysia dan rakyat Malaysia sudah BANKRAP sama sekali.

Oleh kerana dasar Anwar tersebut,  maka (menurut Dr Ariff):-

'By August last year,  the Malaysian authorities were understandably more knowledgeable about the equilibrium market value of the ringgit than they were in the beginning of the currency crisis,  having seen the wide range within which the ringgit was oscillating,  A VALUABLE PIECE OF INFORMATION WHICH OBVIOUSLY WAS NOT AVAILABLE EARLIER'.

        Anwarlah yang membekalkan THIS 'VALUABLE PIECE OF INFORMATION WHICH OBVIOUSLY WAS NOT AVAILABLE EARLIER'.

        Bagaikan menghentak paku terakhir terhadap kritikan Mahathir berkaitan dengan dasar kewangan Anwar dan IMF,  Dr Ariff berkata:  'The virtual IMF policies adopted in the early phase of the crisis HAVE CERTAINLY BEEN  HELPFUL,  NOTWITHSTANDING THE FACT THAT THEY HAD CAUSED MUCH PAIN AS WELL'.

2.      Di mana-mana jua Mahathir pergi,  beliau menyarankan supaya negara-negara lain meniru Malaysia dalam menangani krisis ekonomi,  iaitu dengan mengenakan kawalan modal dan matawang (secara berpilih).

        Jawapan Dr Ariff:  'There are now…talks of 'exporting' the idea to other countries.  Some African countries,  in particular,  seem enchanted.

        The answer is NO….

        For one thing,  Malaysia's macroeconomic fundamentals were still relatively strong even after the devastating currency attack in July 1997.

        …Malaysia's macroeconomic policies,  with the notable exception of overvalued exchange rates,  have been REMARKABLY SOUND BY ANY STANDARD….Above all,  Malaysia's external reserve position,  despite the
heavy loss of reserves resulting from the desperate central bank interventions in the forex market to shore up the weak ringgit,  was still sizeable,  equaivalent to 3.5 months of retained imports,  by August last year'.

        Penjelasan Dr Ariff menunjukkan dengan amat jelas bahawa pengurusan kewangan Malaysia di bawah Anwar sebagai Menteri Kewangan dan Mohd. Don sebagai Gabnor Bank Negara adalah CUKUP MEMUASKAN.

        Seperti orang yang sudah bankrap idea,  Mahathir dan BN akan terus-menerus memperlekehkan Anwar,  kononnya Anwar tak pandai mengurus ekonomi negara.   Tetapi yang nyata ialah bahawa ahli-ahli ekonomi telah menempelak
dasar-dasar Mahathir (dan Daim) sepertimana yang dapat dilihat daripada tulisan Dr Ariff.

        Seterusnya,  berdasarkan pandangan Dr Ariff,  saranan Mahathir kepada negara-negara lain supaya meniru cara beliau menangani krisis ekonomi Malaysia bolehlah dianggap sebagai saranan bodoh-sombong,  kerana (sepertimana tempelakan Dr Ariff):-

        'What works for a country may not work for others,  as conditions and circumtances vary from country to country.

2. Mahathir dengan angkuhnya menyatakan bahawa Malaysia TIDAK akan menghapuskan dasar kawalan modal & matawangnya SELAGI order kewangan antarabangsa tidak diubah.  Kalau itulah syarat Mahathir untuk menamatkan
dasar kawalan modal,  maka dasar ini nampaknya akan kekal untuk satu tempoh yang lama (kalau Mahathir masih berkuasa selepas pilihanraya ini).

Jawapan Dr Ariff:  'The September 1998 controls are likely to severely constrain further expansion of the Malaysia economy after normalcy is  re-established.

To put it differently,  CAPITAL CONTROL CANNOT BE A LONG-TERM SOLUTION.
 
THEY WILL NOT JIVE WITH THE OUTWARD LOOKING STRATEGIES THAT DRIVE THE OPEN ECONOMY OF MALAYSIA.

Nyatalah Dr Ariff menentang pendapat dengan Mahathir dalam isu ini.  Kalau kita terus sokong Mahathir dengan retorikanya sehingga selepas pilihanraya ini,  maka kita akan menuju bencana ekonomi yang serius.   Maka itu, kita wajib buang Mahathir dan BIARKAN MAHATHIR TERJUN DENGAN  LABU-LABUNYA…BIARKAN…BIARKAN…!
 

Analisa Dr Ariff begitu objektif dan tajam.   Sebagai Ketua Pengarah MIER,  beliau nampaknya sangat berani menempelak Mahathir.  Syabas Dr Ariff!

Kita juga faham mengapa terdapat sedikit sebanyak 'ampu' di sana sini kerana tanpanya,  tidak mungkin rencana Dr Ariff dapat disiarkan di akhbar kroni BN The Star.

Untuk membolehkan pembaca yang 'missed' rencana tersebut,  saya telah  'scanned' rencana berkenaan menggunakan Omnipage 8.0 (OCR) dan menyiarkannya di bawah ini.

Wassalam.

Islah Rakyat
 

[BERIKUT ADALAH RENCANA PENUH DR ARIFF]
 

M'sian controls not easily replicable

By DR MOHAMED ARIFF
Executive Director
Malaysian Institute
of Economic Research
 

MALAYSIA'S exchange and capital controls intro-duced last September were described as "shocking" by virtue of the fact that it flew in the face of economic orthodoxy.

One year after, Malaysia stands tall as its measures are seen to be working, confounding the critics, although it could still be argued that the country's impressive economic recovery has little or nothing to do with these controls or that the Malaysian economy would have performed even better in the absence of such controls.

This issue, no doubt, will keep many Ph.D. candidates busy for several years. Be all that as it may, it cannot be denied that some critics, including no less than the World Bank and the International Monetary Fund (IMF)  have  turned 180 degrees in their comments on the Malaysian model of crisis  management. Malaysia's home-grown solutions to the financial crisis has earned kudo's  from many.

There are now even talks of "exporting" the idea to other countries Some African countries in particular, seem enchanted. All this raises the question of the replicability or tranferability of  control measures a la Malaysia elsewhere.

The answer is no. To comprehend this, one needs to first examine the  particular circumstances under which Malaysia's control measures were introduced and the manner in which they were implemented. For one thing, Malay-sia's macroeconomic fun-damentals were still rela-tively strong even after the devastating currency attack in July 1997.

For another, the timing of controls was almost perfect in September last  year. For starters, Malaysia's financial system was not as weak as that of South  Korea, Thailand or Indonesia, although the Malaysian banks had overstretched  themselves beyond what prudence would permit.

The ratio of non-per-forming loans to total loans (around 15%) pale in comparison with that of the other crisis-hit coun-tries. The central bank super-vision, surveillance and control in Malaysia com-pare  favourably with many counterparts in the region.

In June 1997, loans to the property and security markets accounted for a much smaller proportion (41.5%) of the total, com-pared with other  crisis-hit countries.

The ratio of foreign debts to gross national in-come was also relatively small at 42%, with short-term external debts ac-counting for less than onethird of the total, quite unlike other crisis-hit countries where I he corre-sponding ratios were much higher.

  Malaysia's macro-economic policies, with the notable exception of  overvalued exchange rates, have been remarkably sound by any standards. Besides, Malaysia's export manufacturing sector has remained fairly strong.

Above all, Malaysia's external reserve position, despite the heavy loss of  reserves resulting from desperate central bank interventions in the forex market to shore up the weak ringgit, was still sizeable, equivalent to 3.5  months of retained imports, by August last year.

In restrospect, all these have constituted pre-conditions that could ensure the subsequently successful implementation of exchange and capital controls in Malaysia.

In other words, Malaysia's macro-economic conditions prior to the imposition of controls served as a solid foundation for the bold control measures.Malaysia had, therefore, the option of going to Malaysia had, there-fore,  own pace, an option not avail-able to other crisis-hit countries. Had Malaysia imposed exchange and capital con-trols at the beginning of the crisis, it might have been a disaster.

Much would, however, have depended on the ringgit-dollar peg. The chances are that the ex-change rate of the ringgit would then have been fixed at a much higher level arbitrarily, closer to RM3.00 per US dollar which would amount to a depreciation of about 20% from the pre-crisis RM2.50 benchmark.

At that rate and at that time, the ringgit would have been grossly overvalued, in which case it would have been extremely difficult for the central bank to defend the peg, as demand for for-eign exchange would have outstripped supply.Under this scenario a parallel market for foreign exchange would have emerged with all the attendant problems, exports would have suf-fered, and investor confi-dence would have been severely dented "

By August last year, the Malaysian authorities were understandably more knowledgeable about the equilibrium mar-ket value of the ringgit than they were in the beginning of the currency crisis, having seen the wide range within which the ringgit was oscillating, a valuable piece of information which obviously was not available earlier.

The ringgit plummeted from RM2.50 per dollar in 1997 to RM4.88 in January  last year. Subsequently, the ringgit strengthened to RM3,46 vis-a-vis the dollar, around mid-February last year, before weakening again all the way to RM4.22 at end August 1998.

Like a pendulum, the market price tends to swing from one extreme to the other, back and forth several times before it could find a resting place which economists call "the equilibrium." Knowing full well that the ringgit, in the second round of oscillation,

ranged between RM3.46 and RM4.22 per dollar, it was quite safe for the Government to fix the value of the ringgit between these two points.Simply put, the exchange rate of RM3.80 to the dollar, chosen by the  -authorities, was not entirely arbitrary, as it approximates a midpoint or a  median or a mean.

The external value of the ringgit was thus deliberately fixed at a level where it would remain undervalued for some time. This could ensure that the fixed exchange rate regime was manageable and that it would give Malaysian manufactured exports a competitive edge.

The virtual IMF policies adopted in the early phase of the crisis have certainly been helpful, notwith-standing the fact they had caused much pain  as well. The severe import com-pression that led to bal-looning trade surpluses until  September last year and beyond could not have taken place otherwise.

In the absence of higher reserves, which were at-tributed largely to import compression which, in turn, was ascribed to the virtual IMF policies, it  would have been difficult to implement and manage the control regime that was subsequently put in place. The rest is history. The US dollar has been weakening against almost every currency in the world  ever since.

This has meant that the ringgit has continued to depreciate with the dollar and that the undervalua-tion of the ringgit has wid-ened over the year. The upside is that it has strengthened the coun-try's balance of payments significantly, with exports continuing to overtake im-ports and international re-serves continuing to grow.

The undervaluation of the ringgit has also provided an incentive for foreign capital not to leave the country after end -August 1998 when the moratorium was lifted.The downside is that Malaysians are short-changed, while domestic resource allocation is tainted by price distor-tions.

There is the danger of Malaysian exporters rely-ing primarily on the weak  medium and long term, the adverse effects can be debilitating. It does appear that Malaysia's own recipe has worked at least for now.It has had a positive psychological impact on the local investors, although foreign investors seem somewhat unsure. It has certainly reduced uncertainty, to say the least. As a stop-gap measure it does make a lot of sense.

However, the medium and long term implications of exchange and capital  controls are a cause for concern.What works for a country may not work for others, as conditions and circumstances vary from country to country. It is extremely doubtful that South Korea, Indonesia and Thailand can afford, let alone, survive, the Malaysian style of crisis management.

For these countries needed massive injections of external funds.Also, what works for a country at one point in time may not work at another, as conditions and circumstances change over time.

Policies that are good for one phase of the cycle may well be bad for another.While capital controls have arguably contributed much to the stability and recovery of the Malaysian economy, they may act as sand in the wheel once the Malaysian economy reverts to the 1997 level. The September 1998 controls are likely to severely constrain further  expansion of the Malay economy after normalcy is re-established.

To put it differently, capital controls cannot be a long-term solution.They will not jive with the outward-looking strategies that drive the open economy of Malaysia.It is also important to ensure that the controls are dismantled gradually, and not at one go, to ensure a smooth transition.Behind the rhetoric lies considerable pragmatism, as shown by the fact that the Government has been gradually loosening the controls sincemid-February this year.

First, the captivity of foreign capita was substituted by a graduated exit tax rate of 10-30%.
Second, the exit tax was replaced by a graduated profit repatriation levy of 10-30%.
Third, the exit tax rate was subsequently standardized at a flat 10%. And, more recently, offshore banks operating in Lacuna were allowed to make  ringgit-denominated loans.

What next? Standardization of the profit repatriation levy at a flat rate? Or replacement of profit repatriation levy with a non-discriminatory capital gains tax, if not total abolition? Malaysia is by no means an average developing country. It is almost unique in many ways.Its experience and experiments are certainly worth watching, but not easy to emulate or imitate.

Views expressed here are those of the writer in his personal capacity
 

[The Star,  Wednesday October 20 1999]