Malaysian Finance Chief Defends Bailout of Hobbled CompaniesBy Evelyn Iritani
Los Angeles Times
Malaysia's outspoken trade minister on Monday defended her government's decision to bail out several troubled companies such as the powerful Sime Bank, arguing that letting them go bankrupt would lead to increased joblessness, social instability and a slowdown of the nation's economic recovery.
In an interview, Minister of International Trade and Industry Rafidah Aziz said the tough economic medicine forced on Indonesia, Thailand and South Korea in return for financial aid from the International Monetary Fund was fiscally inappropriate and politically explosive. Those countries have closed down dozens of bankrupt financial institutions in order to meet IMF conditions.
Malaysia has felt the repercussions of its neighbors' financial turmoil, having seen a flood of illegal job seekers from Indonesia and Thailand since last summer's currency and stock market collapse throughout South Asia. Since January, the Malaysian government has arrested and deported thousands of illegal immigrants, arguing that it needs to keep jobs open for domestic workers.
"In Indonesia, now, industry has come to a halt," said Rafidah, who is visiting Los Angeles, Seattle and San Jose, Calif., this week to recruit high-tech investment into her troubled economy.
Malaysia vigorously resisted turning to the IMF for help, even when its markets tumbled further after Prime Minister Mahathir Mohammad lashed out at foreign currency speculators and threatened to tighten market regulations.
While Mahathir has toned down his strident criticisms of the West in recent months, the government has not changed its basic tune. Rafidah said Malaysian officials still believe the root cause of last summer's meltdown was not domestic corruption or fiscal mismanagement but currency speculation that sparked a crisis of confidence and massive outflows of capital from the region.
As the host of this November's summit of the Asia-Pacific Economic Cooperation, or APEC forum, Malaysia plans to focus attention on the need for a global strategy to manage currency speculation that can destroy "20, 30 years of economic development in one month," according to Rafidah.